Loss of Spouse Creates New Needs : Planning for Survivor’s Financial Health

As people grow older, one of the sad considerations they must face is the financial survival of the remaining partner when one spouse dies.

Mary Ann Bunting, a certified financial planner, stresses that the most important thing new widows and widowers can do is not make any rash decisions.

Bunting, who works for IDS, a financial service subsidiary of American Express here, says the first thing she urges her clients to do is put their money in a cash account for at least 3 months.

“That is to give them a chance to adjust to the fact that there has been a loss and not to make any major decisions until they’re in a good frame of mind,” she says. “Not tying up your money immediately for the long term is also important.”

Eligibility for Coverage

The second thing she advises is that they draw up financial plans that include monthly budgets and establish priorities for growth or income for savings and investments.

The next considerations, she says, are for the clients to determine whether they are still eligible for coverage under the spouse’s health insurance plan and to arrange for transfers of pension benefits and life-insurance payments.

“Long-term health care--that’s a big concern of older clients,” Bunting says, noting that financial matters should be reviewed in light of changing Medicare and catastrophic-health insurance laws.

Other considerations include the clients’ family situations--for example, whether there are relatives or children who must be provided for in the event of their own deaths.

Another major choice is whether the client will stay in the home or sell it. A client who is older than 55 can take advantage of the one-time tax exclusion of up to $125,000 on the profit from the sale of a house.

Follow-Up Sessions

“I try to meet with whatever advisers they have,” Bunting says. “If they don’t have any, I tell them they need an accountant to help them through the next couple of tax years and an attorney to update their wills and, if need be, set up trusts.”

After the financial plan is implemented, Bunting recommends that her clients meet with the financial planner every 2 or 3 months to review information received in the mail. These reviews, she says, help them feel comfortable with their new responsibilities.

“Without a financial plan, things are not coordinated,” she says. “One of the most common mistakes survivors make is listening to people who care about them but who don’t necessarily have the expertise . . . to consider the total picture.”

Bunting also stresses the importance of considering the client’s support system of family and friends when making any long-term decision about finances or moving.

Bunting says her guidelines can apply to anyone, regardless of income level.

How to Look for Help

In choosing a financial planner, Bunting recommends finding someone who has been in the business for a while and asking for references from some of his or her clients. The most important thing, she says, is to have a professional looking out for your long-term financial interests, not just for your immediate needs.

To be certified, a financial planner must have worked in the financial counseling business for at least 3 years and must keep up with the field by completing 60 credit hours of financial courses every two years.

The International Assn. for Financial Planning in Atlanta, Ga., publishes a national directory of financial planners. To order one, send a check or money order for $2.50 to cover postage and handling to 2 Concourse Parkway, Suite 800, Atlanta, GA 30328; or call (404) 395-1605.