What About Mom? Surviving Spouse = CFO | Series 3.3

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Welcome to the Enjoy More 30s: Family Finance

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podcast, the only podcast dedicated to making life more

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enjoyable for young families by hitting on the financial topics

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that tend to weigh on us, stress us out and distract our focus

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from simply enjoying life.

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Welcome to the third episode of the "Your

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Parents Money Mindset" series. Last episode, we covered how to

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extend some of those initial finance conversations to help

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your parents ask more 'why' questions about their situation

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that they may not have in the past. Today's episode is titled

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"What About Mom? Surviving Spouse = CFO", but it is really

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geared towards any surviving spouse. Statistically speaking,

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mom is usually the surviving spouse more times than not. And

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historically, and albeit stereotypically at least, has

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also not been the one who maybe handled the finances. Overall,

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though, this really goes for any surviving spouse who wasn't the

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head of finance for the family. And every family, whether it's

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mom or dad, someone takes the lead. And many times the longer

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term surviving spouse is not the one who handled the financials

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for the family. Think of your own situation- does you or your

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spouse handle the finances and bills the majority of the time?

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If something happened tomorrow, wouldn't it be difficult on the

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other one? So today, we're going to cover what you need to know

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about what financial challenges a surviving parent in this

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position is going to face, and what you can do to help and make

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sure it goes smoothly for them.

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My grandfather, Grandpa Joe, was my idol growing up. He was laid

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back, funny, easy to talk to. And as I mentioned in a previous

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episode, he had always wanted to be an accountant. It goes

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without saying that he was the one that handled the finances in

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his family then. He wound up having a number of different

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health items as he got older, like a lot of people do, with

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various stents in the hospital as well. These eventually

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prompted him to teach my grandmother what he did with the

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finances. How we organize the bills, where the files were

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kept, what needed to be paid when and how. She learned

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directly from him ahead of time. This was really, really

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fortunate because if he had gone suddenly, as so many people wind

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up going, there would have been no transition- it would have

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been like a company with no succession plan.

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So what you need to know is that if there is no transition

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period, your parent who just lost their spouse of maybe 50

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something years, will not only have to go through all the

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intense grieving of losing the most special person in the

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entire world to them, but they will also have to figure out

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where every bank account is, where every investment account

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is, what credit cards are had, what bills need to be paid, how

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these bills get delivered, what income sources are going to

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continue, which ones aren't, any life insurance policies in

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force, and the individual contact information for all of

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those places. They will be completely overwhelmed, it kind

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of goes without saying, and they're going to need help. The

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one fortunate thing, though, is that they will likely want you

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to help, whereas they may not want you to help right now. They

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never did this before, they just lost their spouse. So from what

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we have seen, they tend to be more open to assistance at this

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point.

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What you can do first is to help in organizing, if this is where

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you are. Start with what they know. What bank they use is a

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great start because you can see where all the forms of income

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come from- what pension, Social Security, annuity or investment

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income may be deposited. From here, you can then contact those

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sources to see what is going to continue to come, what is going

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to stop and what needs to be retitled into your surviving

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parents name. You can also, likewise for the bank accounts,

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tell what expenses come in on a monthly basis, and start to get

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an idea of what expenses they may continue to have now that

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they're on their own.

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The next step after organizing is helping to sort what they

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need and what they don't. If your mom has two IRAs, for

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example, and your dad has three, your mom as a survivor probably

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doesn't need five IRAs- consolidating could very well

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make sense. This is also a great time to make sure that all the

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accounts have updated beneficiaries, so go to the

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children or whoever else they kind of wish it to go to.

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Lastly, here are a few areas that can benefit in particular,

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from some additional awareness. Only the higher social security

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will remain. So when looking at the bank statements, if dad made

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more, then regardless of survivor, dad's amount is going

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to be the one that stays. Life insurance can be a bit tricky.

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Policies may not have any premiums at this point later on

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in life if your parents still hold them, or they may be

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through a previous employer as a retirement benefit. So make sure

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to dig up and check on any files that you may find. Annuities

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really are particularly confusing. You really need to

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make sure you understand what you are signing to. Are you

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continuing in the income? Are you annuitizing, which generally

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is not recommended as any principal balance is forfeited

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at death. Are you incurring any new surrender period that will

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make the funds less liquid for what they told you to do? Ask a

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lot of 'why' questions here, as seniors even have special rules

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now when it comes to annuities, because there were too many

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cases of improper product recommendations let's say. For

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IRAs, same thing. Again, you want to make sure you understand

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your options. They can combine these accounts without incurring

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taxes if done so with direct transfers. Liquidations will

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cause the full values to be realized immediately, which is

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taxable. Many institutions in the course of our workings with

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clients here, "I'm calling because my spouse died and I

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want to get to the money", and paperwork is filled out for

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direct redemptions, which triggers that potential huge tax

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liability. Lastly, you can also consider and discuss at this

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time a power of attorney, or a POA as it's referred to, whether

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immediately active to help now, or active upon your surviving

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parent becoming, you know, incapable in some respect in the

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future. Having no designated individual once in a crisis

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situation produces even more stress, especially if there are

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a number of children with perhaps differing points of view

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of what should be done. The POA is what says, "This is the child

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that I want to be making these decisions for me ahead of time."

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So as a quick recap for today. First, you probably know who

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handles the finances between your parents. Second, expect

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that if that parent passes first, there will be significant

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assistance required. Next, start with organizing what they have.

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Kind of like a 'laying out all the Lego pieces first before you

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try and reassemble' kind of mentality, which generally

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starts with the bank statements. Lastly, help in adding extra

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awareness in certain areas such as social security, life

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insurance, annuities and IRAs to help ensure no unfixable

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mistakes are made along the way. And think about getting that

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appropriate POA in order ahead of time.

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Thanks for tuning in today. As always, if you are able to

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implement what we cover, then that's fantastic. You have less

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to worry about than before and can focus more on enjoying life,

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which is the goal of all these episodes. If you are wanting

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help with these things, though, or have questions you need help

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in clarifying, check out the 'Ask Joe' section on the show's

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website, www . enjoy more 30s .com, that's enjoy more three

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zero s .com. Lastly, please make sure to subscribe and review us

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on Apple podcasts if you did enjoy what you heard today, or

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wherever you listen. There are literally millions of young

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American families out there I'm trying to reach and help just

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like you. The next episode is "Inheriting Assets,

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Opportunities, and Headaches" where we're going to cover the

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challenges once assets start passing from your parents to

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your generation, and the items to look out for and steps to

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take to perhaps avoid ahead of time to make it go more

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smoothly. Until next time, thanks for joining me today and

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I look forward to connecting with you again soon.

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The conversations on this show are

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Joseph's opinions and provided for general information purposes

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only. They do not constitute accounting, legal tax or other

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professional advice for your specific situation. You should

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always seek appropriate advice from a financial advisor,

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accountant, lawyer or other professional before acting upon

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any content or information found here first. Joe is affiliated

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with New Horizons Wealth Management LLC, a branch office

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of TFS securities Inc and TFS advisory services, an SEC

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registered investment advisor member FINRA/SIPC.