There is a saying: “The only guarantees in life are death and taxes!” While the timing of taxes is well known, death often happens without warning and can put a real financial burden on one’s family, especially spouse. Therefore, married couples need to take certain financial measures to ensure an unexpected death does not result in financial chaos and stress.
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Here are some financial measures that can help you prepare for the unexpected.
Organized Bank Accounts
Many couples run their finances from a joint banking account, while others use separate banking accounts. Separate accounts are often used in second marriages where the assets are ultimately intended for heirs other than the spouse. For separate accounts, make sure each account owner has enough in their account to operate (pay bills) should their other spouse die suddenly. For joint accounts, make certain they are titled ‘joint with rights of survivorship,’ which will ensure the total account proceeds automatically pass to the surviving spouse.
Credit Cards
Often, credit cards are opened in one spouse’s name with the other spouse listed as a ‘user,’ meaning the other spouse has their own credit card, but the account is not in their name. While this makes for simple bill paying and financial management, it will create problems when the account holder dies. At that point, the surviving spouse will no longer have access to the credit card and must go through the application process. This can take a long time and requires credit inquiries, etc. A better approach is to make certain each spouse has a card in their own name with adequate credit limits for their needs.
Automatic Bill Payment
As a subset of bank accounts and credit cards above, many people have most of their recurring bills automatically deducted from either their bank checking account or a credit card. If you do this as a couple, it’s essential for the bill-paying account to be held jointly. If it’s not held jointly, the surviving spouse will need a detailed list of all auto-pay bills and their due dates.
Safe Deposit Box
If you have a bank safe deposit box, make sure that both spouses have signed the paperwork to have full access to the box. Otherwise, at the box owner’s death, the box will be ‘sealed,’ and there will be no access until you go through the legal process of settling the estate by the estate settlement representative. This process can delay access for weeks or months.
While there are many financial benefits for married couples, thinking about how to handle daily finances if a spouse should pass is usually a low priority. Be sure to have a plan in place with your spouse and consult with a financial advisor to help you be prepared for the unthinkable.
