No one wants to face the inevitable, so couples often neglect to get their estate documents in order. But that can cause plenty of problems, especially if one spouse takes care of all the family finances while the other has little knowledge about them.
“Although many people probably think most couples handle things jointly today, we find it’s still often one spouse, usually husbands, who handles much of the family finances,” says Kathleen Rehl, a financial planner in Land O’ Lakes, Fla. “But leaving one spouse clueless about financial matters increases the possibility he or she will be taken advantage of at a very vulnerable time.”
For example, a new client recently came to see Rehl after her husband’s death because she didn’t know how to read her brokerage statement. Rehl noticed a lot of recent investment trades that her client had not authorized. “They were churning her account to earn more commissions, which we quickly put a stop to,” she says.
If you don’t have estate-planning documents like wills and powers of attorney completed, now is the time to do so. An estate-planning attorney can draw up legal documents, such as a will, durable power of attorney, and a living will. You can find one in your area by going to the website of the American Academy of Estate Planning Attorneys (www.estateplanforyou.com).
You might also want to hire a certified financial planner who specializes in estate issues. You can search for one by specialty and locale on the site of the National Association of Personal Financial Advisors (www.napfa.org).
When your estate plan is complete, make sure your spouse and your executor know where the documents are kept. It’s also a good idea to talk about your decisions with your heirs. “This is especially important if you have several children but feel you need to make special provisions for one of them,” says Diane Pearson, a Pittsburgh financial planner. “Talking about it beforehand might go a long way to avoiding fights later on.”
For example, Pearson has had clients who wanted to leave additional funds to a child who lived nearby and helped take care of them as they got older. “In that case, it’s a good idea to tell your other children that you are leaving extra funds to Sue to repay her for all the gas money and time she spent taking you to the doctor,” she says.
This article appeared in Consumer Reports Money Adviser.