Shawn Anderson: 5:11 on WTOP. Newly widowed spouses face a number of financially significant decisions and looming deadline soon after the loss of their partner. Most of us have never encountered the questions and choices we would need to make even as we're grieving.
Hillary Howard: Joining us live, Dawn Doebler, co-founder of Her Wealth and Senior Wealth Advisor of The Colony Group in Bethesda. Dawn, great to see you as always.
Dawn Doebler: Good to see you.
Hillary: You know, it's almost impossible for one partner in a couple to consider going on when the other person has died. But in that moment of grief there's some real serious thinking that has to go on.
Dawn: That's right Hilary. I notice when working with widows, how challenging it can be for them to make the decisions that are really required to settle their spouse's estate. And if they're not experienced in managing money or hesitant to make decisions, it can be a very difficult time. So, the obvious solution is preparation; meaning that no matter what your age is, if you're part of a couple, you can put a plan in place and consider potential decisions you'd have to face if someone passed away. So, today's article is part one of two on “Six common questions widows face”. These questions can give you an idea what to think about now as a way to prepare.
So, one idea, is on our Her Wealth website, we have our in case of emergency checklist that helps you detail critical information that your heirs would need to know. And let's talk about some of the questions. The first question a widow faces is, “Who settles the estate?” And this relates to our suggestion that everyone should have a Will, that's how you designate who you want to settle your estate. And without a Will, the state laws may dictate who would be appointed.
Shawn: Now, many couples do have life insurance, so what do we need to know about taking that money?
Dawn: Well Shawn, the second big question is, “What settlement option do I choose for life insurance benefits?” And certainly most people think of life insurance as coming to you in one lump sum because that's the most common option. But in reality there are several other options that might be appropriate and if you're currently facing this question or know someone who is, I encourage you to go to our article for a list of options other than a lump sum. And let me give you some examples of when another option might be better. For example, there's a fixed income option, which can be a good choice if someone's younger and will ultimately get a pension or Social Security but they lose their spouse several years before that point in time.
Another example is an interest only income option and this option is the lowest immediate benefit; the death benefit is actually held and you receive just a contracted amount of interest. It may sound like a bad idea, but if you have an inheritor that isn't good with money, this can be a very good option so they don't get a big lump sum that can be squandered. It can also be great if it's intended to pay for a specific expense, like college for a child who might be very young at this point in time.
Hillary: The death of a partner is just so debilitating and ground-breaking, a big change but yet you know, you say people should consider what they're going to do with their home and where they're going to live, which is another huge change.
Dawn: Right, Hillary. I think this is a good example of something people really should think about in advance, so that if the time comes and they have to make the decision, they've already really thought about this. Because a third question widows usually have to face, is where are they going to live; and like many advisors, I suggest really that you pause for a period of time. But unfortunately, sometimes for financial or safety reasons you need to make an immediate decision. So, certainly for older couples, it may be necessary for a widow to move because for safety reasons or she may not be able to maintain the house. So, we want people to be thinking about that in advance and also even if you can financially stay in your home, there may be other reasons for you to make a different decision that's where you can consult people like Care Managers who can help you make that decision.
So, stay tuned for our part two of the six questions that widows face. And in the meantime, as we often say, “Planning in advance, really can be very helpful so that you're prepared to make these difficult decisions if they do arise”.
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