THINGS YOU SHOULD KNOW
IF YOU BECOME A WIDOW

More often than not, a surviving spouse is a woman. Although the gap between the life expectancies of men and women is narrowing, women on average live approximately seven years longer than men. According to a July 1998 Current Population Survey of approximately 13.7 million widowed people in the U.S., 80% are women. All widows are not alike--they span a variety of ages and come from varied background--although the majority is over 65 years old and are most likely not accustomed to estate planning and financial matters.

If your husband exclusively handled your family’s financial matters in the past, you may find the responsibility to do it now somewhat stressful. While grieving over the loss of your spouse it may be particularly difficult to make good financial decisions, but these choices can have major consequences on you and your family’s future security.

Since you will be asked to make important decisions in the next few years, we strongly recommend you find one or more trusted advisers to help you make good decisions. The adviser chosen may be a family friend, a lawyer, CPA, insurance agent or local banker.

After you become a widow, many aspects of your financial life will change, and this too should be reflected in your estate, tax and investment strategies. It is important your advisers recognize this and provide the time and attention you need.

Whether you will be using the advisers previously secured by your spouse or search for new ones, the most valuable will most likely have professional qualifications as well as a personal relationship with you. The following questions apply to all types of advisers and should be asked of yourself after interviewing them:

You might also ask them these questions directly:

Fortunately, it is not necessary to rush into making a lot of decisions in the first year of bereavement. However, if you are appointed executor of your husband’s estate, you will have to file the estate tax return within nine months from the date of death. Your job as executor involves the inventorying and appraisal of the assets, and the payment of any outstanding debts and taxes in order to complete the estate tax return. Working with a competent professional adviser or co-executor can help make this process easier. Once the estate is settled, the executor has the responsibility of distributing the assets to the beneficiaries and/or trusts. If you do not wish to serve as executor, you may resign and the successor executor named in the will takes over. Or if the will so specifies, you may be able to appoint another executor. Your adviser can help you decide on the best course of action to take.

You may have also been appointed trustee of a trust created by your spouse for the benefit of you or other beneficiaries. The trustee’s responsibility is to ensure the trust is administered and the assets are invested prudently in the best interest of all beneficiaries. Administering the trust entails accounting for and distributing income and principal to the beneficiaries, filing tax returns, and paying debts. It also involves good judgment and a real understanding of the beneficiaries’ needs.

Your basic responsibilities are defined in the trust document so you should understand it before deciding to accept trusteeship. You may decide to relinquish this responsibility to the successor trustee or, if the will so specifies, you may be able to appoint a trusted adviser or professional trustee such as a bank trust department or independent trust company to serve as trustee or co-trustee.

Depending on your interest, time and experience you may or may not want to act as the sole trustee. By being the sole trustee you will be able to act promptly to your beneficiaries’ needs and possibly save money. However, as trustee you have personal liability and can be sued if you are negligent in fulfilling your responsibilities. You also may not be able or willing to do all the things required of a trustee. A better solution might be to add a co-trustee, whether it is one of your chosen advisers or a professional trustee to help you.

Even as a sole trustee, if you delegate investing of the trust assets to a professional money manager, you remain liable for the overall investment policy of the trust and for the selection and monitoring of the money manager. By adding a professional trustee you can insulate yourself from most of the inherent liability.

Time spent performing the trustee duties may also be more than you anticipated and there is always the possibility you may end up in the middle of a dispute between beneficiaries.

One of the benefits of either declining the role of sole trustee or adding a professional trustee as co-trustee is that it allows you to defer sensitive judgments to the unbiased professional trustee rather than getting embroiled in a dispute over the requests of various beneficiaries.

Your decision to serve as either executor or trustee, either alone or in conjunction with an adviser or co-trustee, should be based on many factors: your mental health, your ability and interest to fulfill the demands placed on you and the availability of advisers you trust to guide you.

If you are not up to the tasks and/or don’t have adequate confidence in using an adviser, give careful consideration to utilizing the services of an independent trust company or bank trust department. Interview them as you would any other professional before hiring them. If you find one that will satisfy you, you can free up a lot of time and emotional energy to get on with the rest of your life.

What about managing the various investment portfolios that might now exist? What about getting interim management for the family-owned business, someone to manage the rental properties or someone to sell off the family’s farm? While there is no right answer as to the best provider of these services, a professional asset manager and trustee should be given careful consideration. These are not jobs ideally suited for the lay-person.

While the estate is being settled by you and the various professionals you might have hired to take care of your husband’s estate, you should also begin to determine how you are going to get your own financial needs met. This may or may not involve the professionals you utilized as adviser, executor or trustee. You are going to have to come to terms with how you are going to pay your bills, manage the assets you have now accumulated, and distribute these assets upon your death. By evaluating the advisers you are using to help you settle your husband’s estate, you may be able to find one or more to now help you financially cope with your future needs. If not, keep interviewing other suggested advisers until you find one who gives you the service you need.

If you receive assets from your spouse’s estate or remain trustee of other portfolios, you should review these portfolios in light of the new family situation. Since your financial circumstances have likely changed, you will need to have a second look at how your assets are invested. Here are some questions you will need to answer:

There are many qualified professionals who can help you structure your portfolios to give you peace of mind that you will comfortably meet your objectives. The interviewing skills you have honed in selecting advisers and managers for your husband’s estate can be used effectively to find the right people to help you.

Lastly, you should review your own estate plan to make sure it reflects your new situation. It is likely that your estate plan was established at the same time as your spouse’s. Now is a good time to have your attorney check it over to make sure it is appropriately structured to accomplish your own legacy wishes.

In summary, becoming a widow will create dramatic changes in your emotional and financial life. Depending on the size of the assets and your spouse’s will, you will be asked to make many complicated financial and legal decisions at a time when you may not be prepared or able to do so.

We believe the key to making this transition easier is carefully identifying and retaining advisers who will work with you (and each other) to lead you through the maze of decisions you must make. Working with people you trust will allow you to make more confident decisions and increase your chances for having good outcomes: peace of mind, freedom from liability and your family’s financial security.

You need not be alone in carrying on your family’s legacy.

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