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Expecting the Unexpected in the Loss of a Spouse

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The unexpected death of a family member is an emotional, vulnerable moment for families, who must subsequently address how they will move forward without their loved one. While death can be a sensitive topic, it is also one that all families need to plan for, to ensure they are prepared in the event of a sudden loss. This is of particular importance for women, as the average age of widowhood is 59, notes the U.S. Census Bureau. Yet, nearly half of advisors say that hardly any or none of their married female clients have a contingency plan in place to navigate the psychological impacts and financial challenges of the loss of a spouse, according to Key Private Bank's Quarterly Advisor Poll.

Families should not wait to plan for these instances — a diagnosis of a critical illness or devastating disability can happen to any couple without warning, placing one spouse in charge of financial decision-making, while simultaneously caring for a loved one. Women and their families should work with their advisors to start discussions now about the potential loss or disability of a spouse.

How can families begin these conversations? Below are some recommendations.

What are the psychological and financial challenges that you would face if you experienced the loss of a spouse?

More than half (60%) of advisors say that female clients struggle with both the psychological and financial challenges associated with the life change of losing a spouse, according to the Advisor Poll. Thus, it's important to start with an open and honest conversation with your family and advisor about the hurdles that would arise. By discussing both psychological and financial challenges now, you establish a firm understanding of the concerns that would need to be addressed.

What are the short-term versus long-term financial decisions that you need to make?

Identifying the financial decisions that must be made immediately, versus those that can and should wait, is often the biggest challenge widows face. Yet, it's also the most important step women should take following the death of a spouse, according to the Advisor Poll. Take time now to make a list of your anticipated short-term financial needs related to the death of a spouse, as this will prevent surprises later.

What strategies could you employ to meet ongoing financial obligations or expenses?

There are a number of different ways to identify and leverage alternative sources of income due to the death of a spouse—from establishing a budget to altering spending habits, from life insurance to downsizing properties. Work with your advisor to determine the right strategies for you and your family, based on your wealth preservation and protection needs.

How do you decide which expensive assets to keep and which you should not?

More than three-quarters (78%) of advisors say that losing a spouse limits or slightly limits cash flow, the Advisor Poll found. You may have an attachment to family assets that are expensive to continue to own, such as a vacation home. Work with your spouse now to make a list of all your assets, and talk with your advisor, who can help you visualize the long-term effect and financial trade-offs of continuing to hold onto certain expensive assets.

What additional steps would you need to take in order to have full control of family finances?

For some women, taking full control of family finances after the death of a spouse may require working through stressors one-by-one, and for others, it may mean honing critical wealth management skills. Organize your accounts and critical documents to determine what you can do now to prepare yourself to fully take over family financial management, as well as identify financial areas where you will need the most support from your advisor.

Whom do you trust most to provide sound advice?

Often, women who have become widows will seek advice from friends or family who may not have extensive financial expertise. Remember that while friends and family can provide emotional support in the event of a loss, your advisor has your best interest in mind and will provide sound financial advice for your family in your time of need. Do not be afraid to have open conversations with your advisor about what to do in the event of the death of a spouse.

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