Financial/Estate planning for widow

[Raymond01]

I am recently retired with a single life annuity pension, using Pension max (life insurance policy). My pension represents 50% of our current income needs with the other 50% coming from interest, dividends, Cap Gain distributions from a taxable account. Our 401k is untapped at this time.

I'd like to set up a plan for DW in case something happens to me. I am the finance guy and while she is very intelligent, not real interested/educated regarding finances, and I don't want someone to take advantage of her if I pass first.

So my question is, what would you suggest the plan say?
- Convert enough of the money into an annuity to pay annual bills?
- Convert money into dividend paying stocks or funds like Wellesley?

etc. etc.

Has anyone else come up with a plan like this and what does yours say?
Thanks!

 

[athena53]

Do you have any children who can take over? My parents are the same. Dad is great at finances and very computer-friendly; Mom is neither. Dad has specified that I'm in charge if he's gone or otherwise unwilling/unable to manage the money. I'm comfortable that, given their investments and modest expenses, they're pretty well funded. He said Mom doesn't want to know anything other than that she's unlikely to run out of money!

 

[ivinsfan]

How old are you both? If your wife is capable of understanding but just not interested I suggest you try to bring her into the financial loop. It's pretty important she understand what's going on even if you try to make things simple. Even with someone else helping out, it's important your wife understands at least the basics.

Are there things in your day to day life that your wife handles and you know nothing about? I suggest you figure out something you might have difficulty with if she were gone and suggest to her that you each start helping each other do and understand these jobs.

As a spouse in a farming area I don't really like the idea of passing the money and knowledge off to someone else to "spare or protect the little woman from worrying about it". A lot of farms around here are family operated and when the husband dies people suddenly start acting like the widow doesn't know enough to tie her own shoes. She'll have anybody and everybody telling her what she needs to do.

 

[Raymond01]

I do have kids, but they are even less educated/interested than DW regarding financial intricacies. Call it a timing thing.

I could educate DW, but as time goes on and things are going "okay", I suspect that will trail off.

My question is really not a matter of "who", but "what" and "how". What would you recommend your significant other do with your money if you were to meet sudden demise?

 

[brewer12345]

My "in case I get hit by a beer truck" letter says to file for SS survivor benefits and any additional $$$ needs can be met by cash on hand and/or interest/dividends the portfolio throws off. I also explain how to look for a fee-only planner. As time goes on I am grooming my eldest to take over, since she has a natural aptitude and interest in all of this. I also plan to gradually simplify the portfolio so that management will require simple rebalancing rather than making a valuation call on obscure equities.

 

[Bestwifeever]

If I were you I would ask DW what she wants--have some suggestions then or later if she says "as simple as possible" or words to that effect. Then you could start restructuring your holdings now. Be sure to have a record of it where your less educated/interested offspring can find it, as they may suddenly become more interested many years from now if there is an inheritance

 

[Raymond01]

My "in case I get hit by a beer truck" letter says to file for SS survivor benefits and any additional $$$ needs can be met by cash on hand and/or interest/dividends the portfolio throws off. I also explain how to look for a fee-only planner. As time goes on I am grooming my eldest to take over, since she has a natural aptitude and interest in all of this. I also plan to gradually simplify the portfolio so that management will require simple rebalancing rather than making a valuation call on obscure equities.

Thanks everyone for your input. This is the kind of info I am looking for. DW and I are 52, not sure how that affects SS survivor benefits. Will need to look into that. But going to a fee only planner is a great idea.

 

[athena53]

I've got a trust set up. DH is 15 years older than I am so I doubt he'll end up a widower, but if he does, my brother, a CPA, is the trustee. DS, my only child, can become a co-trustee if he wants but I doubt he will. My brother has wide latitude about what he can do for DH with the trust money. (DS is the beneficiary of my IRAs which would be more than enough to put his only child plus any of her future siblings through college. DS says he doesn't want my money, bless him.)


We also have a short-term bond fund at Fidelity for $25K in which DH is a joint tenant with right of survivor so he has money he can get immediately. I prepared a letter describing the general provisions of the trust, where the documents are, where the accounts are (and numbers and contact info but no logon names or passwords), and roughly what's in them. My brother, DH and DS all have copies. DH, like your DW, is intelligent but not interested in investing.


Some of this may work for you.

 

[Katiek]

My Dad recently passed away and we've been able to help my Mom. She knows a lot about saving, but wasn't that interested in investing. If your wife doesn't want too many details at this point, maybe you could start with a list of top 5 or 10 "don't dos" just to help her avoid a big problem.

Things like: 1. Be careful about purchasing annuities/life insurance or any other complicated financial product.

2. Don't invest in any funds with a load etc.

3. Don't give any advisor the authority to make trades etc.

4. Don't make any big changes in the investments for some period of time

Prepare a list of where the investments and other key information is, and make sure she knows the location. If you can get recommendations for a lawyer or advisor that people you know have used and recommend, maybe you could leave some suggestions of people she could consult. Just figuring out what she needs to give someone so they can prepare the taxes was a big deal for my Mom.

 

[meierlde]

My Dad recently passed away and we've been able to help my Mom. She knows a lot about saving, but wasn't that interested in investing. If your wife doesn't want too many details at this point, maybe you could start with a list of top 5 or 10 "don't dos" just to help her avoid a big problem.

Things like: 1. Be careful about purchasing annuities/life insurance or any other complicated financial product.

2. Don't invest in any funds with a load etc.

3. Don't give any advisor the authority to make trades etc.

4. Don't make any big changes in the investments for some period of time

Prepare a list of where the investments and other key information is, and make sure she knows the location. If you can get recommendations for a lawyer or advisor that people you know have used and recommend, maybe you could leave some suggestions of people she could consult. Just figuring out what she needs to give someone so they can prepare the taxes was a big deal for my Mom.

You might add to the list to do nothing with investments for a few months to let emotions settle down. (Might file for SS etc, but don't buy annunities etc)

 

[pb4uski]

I'm following Brewer's general scheme... I'm trying to keep things simple and have a letter of instructions for DD (a CPA) to help DW with. Similar to others, DW certainly could do it but lacks the interest/aptitude. Additional complication is that BIL is a life insurance agent who I have rebuffed at every turn so I'll need to make it clear that no annuities are to be purchased as I'm sure he would be making a pitch at some point.

I think I'll just leave instructions to continue the path we are on with some added simplifications and leave the systematic withdrawals that we currently have in place with periodic "raises" to cover inflation.

 

[mathjak107]

I have some very strong opinions on financial planning for women which may not apply to every woman but it does apply to most women. here are some things few ever think about when giving advice to women.

as if we didn't know it ,women are different creatures than men. they think different ,have different needs ,wants and requirements.

any good financial planner will tell you:

men are more interested in growing wealth , they care about allocations ,investments , getting the biggest bang for the buck ( no pun intended),beating indexes , etc .

women clients are different as far as what brought them to that planners office and it is nothing like the mans reason. a mans reason is usually facts and figures , a womens reason is she has a story to tell. ( don't they always?) ha ha ha


women have very different concerns and it is usually centered around the fact they have visions of being alone eventually and being the proverbial bag lady under the bridge after they out lived their money.

women want security , I know that because when I approach women in clubs they usually call out security ,security, ha ha ha

women live longer than men , a big point when planning but more important while 80% of all men die married ,80% of all women die alone.

women usually don't like to take on much volatility,especially a widow who just lost a social security check or someone alone..

as simple as i made our investing i will eventually dumb it down even more as we age , perhaps with some partial annuitization so my wife can feel as if she gets a pay check every month too.

 

[pb4uski]

You're slipping there mathjak... I see three capital "I"s in your post.

 

[bclover]

Hi op,

I lost my wonderful husband of 30 years in 2013 He was only 55.
some observations.

I too don't have much interest. I still don't, every one says "no one cares about your money like you" which makes absolutely no sense to me. yes, I care about my money. I still find financial planning boring and confusing to say the least. I care about my health but I still go to a doctor.

For the first year, I didn't do any thing. I inherited almost 2 million dollars, 1/2 was from life insurance, about 500K from his 401K and an annuity at about 490K.

LOL, mathjack is absolutely right about one thing I still have visions of being under the ben franklin bridge and eating alpo. LOL

Right now I am working with a financial planner. I did my due diligence and am comfortable with our course of action. He can't make any trades and I already had an annuity, lol sorry guys. I still make it a point of trying to learn as much as I can about my investments.


I am still working and I also have my 401K along with both our social security.


I plan on retiring next year at 56.


Personally op, I would make sure she had a good support system with tons of love and friendship. Believe me, I would give up every single dime and live under that proverbial bridge with my dh, I miss him immensly

 

[Accidental Retiree]

You're slipping there mathjak... I see three capital "I"s in your post.

 

[mathjak107]

You're slipping there mathjak... I see three capital "I"s in your post.

my nook does that on it's own . i wish my keyboard could do it lol.

 

[mathjak107]

Hi op,

I lost my wonderful husband of 30 years in 2013 He was only 55.
some observations.

I too don't have much interest. I still don't, every one says "no one cares about your money like you" which makes absolutely no sense to me. yes, I care about my money. I still find financial planning boring and confusing to say the least. I care about my health but I still go to a doctor.

For the first year, I didn't do any thing. I inherited almost 2 million dollars, 1/2 was from life insurance, about 500K from his 401K and an annuity at about 490K.

LOL, mathjack is absolutely right about one thing I still have visions of being under the ben franklin bridge and eating alpo. LOL

Right now I am working with a financial planner. I did my due diligence and am comfortable with our course of action. He can't make any trades and I already had an annuity, lol sorry guys. I still make it a point of trying to learn as much as I can about my investments.


I am still working and I also have my 401K along with both our social security.


I plan on retiring next year at 56.


Personally op, I would make sure she had a good support system with tons of love and friendship. Believe me, I would give up every single dime and live under that proverbial bridge with my dh, I miss him immensly

it is so true , most women do have that same vision.

i guess because my wife was a widow when i met her i am kind of sensitive to the fact she does not want a complex portfolio dropped in her lap.

i think if she had her way a guaranteed income from an annuity and guaranteed inheritance for heirs through life insurance would be her idea of a perfect structure.

 

[Golden sunsets]

Mathjack: WOW. The only thing I can agree with you on is the fact that women live longer than men and for that reason are understandably concerned with outliving their money. The rest of your stereotyping is very condescending IMO. "Dumbing it Down for her" Is an extremely arrogant attitude. My Mom is 90, a widow of 5 years and thoroughly capable of understanding her finances. I take the lead in my family on finances because personal finance interests me even though my husband, an Econ major could fulfill my role. My daughter is just as savvy as my son with her finances.

 

[ivinsfan]

Mathjack: WOW. The only thing I can agree with you on is the fact that women live longer than men and for that reason are understandably concerned with outliving their money. The rest of your stereotyping is very condescending IMO. "Dumbing it Down for her" Is an extremely arrogant attitude. My Mom is 90, a widow of 5 years and thoroughly capable of understanding her finances. I take the lead in my family on finances because personal finance interests me even though my husband, an Econ major could fulfill my role. My daughter is just as savvy as my son with her finances.

Agree completely with this,maybe some women for whatever reason, prefer to have their DH drive the investment bus and keep the details to a minimum. That makes no sense to me. What if you get a divorce and have no real idea what your family assets are and where all your accounts are located? "Dumbing" down the portfolio lowers most returns and means you need more capital to invest.

I liken this to taking your car to the shop. You might not know how to fix it yourself, but you should have some basic idea of car issues and costs, just to protect yourself from getting ripped off. Are car repairs and investment stuff my main interest and or hobby? No, but I know enough that I can make some prudent decisions on my own if need be.


Even the list of don't do this or that is kind of offensive to me. If you don't want your widows to use a fixed fee advisor explain a few basic things to her instead of leaving a page of stuff that says do this or don't do that. I suggest you do something as simple as an annual or semi-annual brief finance review as a starting point.

 

[athena53]

Agree completely with this,maybe some women for whatever reason, prefer to have their DH drive the investment bus and keep the details to a minimum. That makes no sense to me. What if you get a divorce and have no real idea what your family assets are and where all your accounts are located? "Dumbing" down the portfolio lowers most returns and means you need more capital to invest.

Mathjack's post struck me that way, too, but he did say "in general". Actually he's describing a good segment of the population, including my mother and my DH. "Dumbing it down" could be exactly what many people here advocate: put it all in ETFs that have to be rebalanced periodically. Or, leave it for someone else, either a trustee or a paid advisor, to manage. Make sure they know the basics. I watch too much "American Greed", and many of the people who lose their life's savings thought they were getting in on a deal with huge returns and "no risk" because they were somehow special. A "do this/don't so that" list might keep them from predators.

You've got to meet people where they are. Mom and my DH both have brains but they're never going to be as fascinated with investments as I am or my Dad is. Plan accordingly.

 

[bclover]

Mathjack: WOW. The only thing I can agree with you on is the fact that women live longer than men and for that reason are understandably concerned with outliving their money. The rest of your stereotyping is very condescending IMO. "Dumbing it Down for her" Is an extremely arrogant attitude. My Mom is 90, a widow of 5 years and thoroughly capable of understanding her finances. I take the lead in my family on finances because personal finance interests me even though my husband, an Econ major could fulfill my role. My daughter is just as savvy as my son with her finances.

I don't think it's "dumbing it down" at all. I think it's actually knowing what each persons strengths and weaknesses is.

Listen, I have a pHD in Chemistry, been a Research scientist all my life. I figure I'm halfway smart, some times lol. Two things I loathe, hate and despise...
Writing
Finances.

I suck big time at writing. I have to pay some one to write my technical reports, don't like 'em, not going to learn how to be a better writer, it will never be my strength.

Same thing with investing. I find it tedious, dull, boring and any other adjective that means "it sucks". All that crap about "no one will care for your money like you" is bull. I care a great deal about my money and have tried to learn the basics about investments.

So why would you then force some one like me to suffer through it? What leaving me with a couple of million dollars is supposed to motivate me to become a financial whiz?? that's insane!

People scream here and on other forums about how evil financial planners are, do you really think I'm going to suddenly become a whiz at investing? Didn't like to do it when I was married just because I'm now a widow, what?? that magically is going to make me interested in it.


Now sure I understand basic household finances. I know to live below my means, how to balance my checking account, what interest does and how much it cost but after 10 years I still can't figure out why everyone hates annuities.


Yeah, dumb it down for me. After 57 years and a few tragedies I'm honest enough to know what I will and will not do well.

 

[brett]

We changed investment advisors several years ago shortly before I retired.

DW is not interested. Apart from the usual attributes my goal was to find someone that DW was absolutely comfortable with...someone who talked to her not through her. My goal was to arrange our affairs so that if anything happened to me the investment advice/direction would carry on as before.

I wanted to avoid a situation where DW had to start shopping for advice. Too many wolves out there.

We were successful in doing this however it did take time to find the right person/right firm. There are so many unprofessional and unqualified advisors out there let alone the qualified ones whose advice is on the edge.

Bottom line is that DW is now very comfortable with the advisory service to the point that she happily comes along to our regular meetings.

 

[Bestwifeever]

Mathjack: WOW. The only thing I can agree with you on is the fact that women live longer than men and for that reason are understandably concerned with outliving their money. The rest of your stereotyping is very condescending IMO. "Dumbing it Down for her" Is an extremely arrogant attitude. My Mom is 90, a widow of 5 years and thoroughly capable of understanding her finances. I take the lead in my family on finances because personal finance interests me even though my husband, an Econ major could fulfill my role. My daughter is just as savvy as my son with her finances.

I just switched genders (and capitalized all the proper nouns ) in mathjak's post and it worked out okay for me. No harm, no foul, no permanent damage imho.

DH (valedictorian of his high school class) is so financially clueless that we still get all paper bills sent to us even though I pushpay them all online, because when I get hit by that bus he won't know what they are and is terrified that I will try to explain it to him ahead of time.

 

[Raymond01]

We changed investment advisors several years ago shortly before I retired.

DW is not interested. Apart from the usual attributes my goal was to find someone that DW was absolutely comfortable with...someone who talked to her not through her. My goal was to arrange our affairs so that if anything happened to me the investment advice/direction would carry on as before.

I wanted to avoid a situation where DW had to start shopping for advice. Too many wolves out there.

We were successful in doing this however it did take time to find the right person/right firm. There are so many unprofessional and unqualified advisors out there let alone the qualified ones whose advice is on the edge.

Bottom line is that DW is now very comfortable with the advisory service to the point that she happily comes along to our regular meetings.

VERY good advice IMO, thanks to you and thanks to everyone who contributed to what I have found to be a very informative thread.

 

[Lsbcal]

Here's what we've done:
1) Have most of our investments consolidated with Vanguard and have a revocable living trust with assets placed in it.

2) Talked to DW about investing occasionally. She's not very interested except for what the fun spending budget is this year.

3) Wrote a letter suggesting some Vanguard funds like Wellington or Wellesley. I suggested she contact VG, do the brief investor risk profile, and restructure into some reasonable AA like 40/60 or 50/50.

4) Create a trail that is fool proof: Put the letter (#3) in the safe deposit box. Quiz her occasionally on what trail to follow. The safe deposit box has trust docs, pink slips, I Bonds, where other assets are, etc. Keep a copy of this letter on my PC to review and update every few years.

5) Relax, the defensive planning phase is in place.