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Saturday, January 31, 2009

How Not to Die

I'm going to rant about a dead guy today. Actually I have never met him but he is just one of the many people I end up "knowing" because they leave their spouse a financial disaster to deal with after they die. I am running out of fingers to count how many clients I get (usually women) whose spouses die unexpectedly (usually men) who end up in my office with an armload of paperwork and no clue as to their financial position, no job skills because "their husband always took care of everything", and no money to even pay the light bill or car payment. Here are some tips on how not to die:
  • Don't die without an updated Will. Many people die unexpectedly. Because of this fact, they put off writing a Will or updating their Will which leaves a huge probate mess and lots of disgruntled relatives. Whenever there is a change in your life--a divorce, a new spouse, new kids or other heirs, new property added or old property disposed of--check out your Will and make sure it covers your current situation.

  • Don't die without life insurance. To bury you is going to cost a lot. If you don't have money now, your poor spouse certainly isn't going to have the money to pay for your funeral and burial or cremation. And that's only the tip of it. How will your spouse continue to make the house payment, pay the electric bill, make the car payment so the car won't get repossessed, or pay for the kid's braces? If you leave them no money they will have no money--it doesn't magically appear after you die!

  • Don't die in debt. This is hard since many people have debt in the form of a mortgage, credit card bills, tax debt, and other things they need to pay off, however most debt doesn't die with you so if you think your spouse will get the equity in the house, think again. Most debts attach to your estate so if you have a huge tax debt, the IRS will go after the equity in your home or other investments and they get to be first in line, not your spouse. Work five jobs if you need to in order to get your debts paid off. For larger debts, make sure to have enough life insurance to pay off the debt should you die.

  • Don't die with a spouse who is clueless and skill-less. I've met women who never learned how to drive because their husband always drove. I've met women who move to this country to marry a husband who later dies, leaving them in a strange country with very little knowledge of English or the customs of our country. I've met men who think their home is nearly paid for and that they have no credit card debt only to add shock to their grief when they find out that their wives had somehow put three mortgages on their home, emptied their retirement account, and left behind a stack of maxed out credit cards. I've met women who raised a family and were the perfect wife yet had never developed any job skills; after their husband's sudden death, they were thrust into a job market that they knew nothing about.

  • Don't die and leave an unorganized mess for someone else to sort out. Information on where to find your Will, life insurance policy, current bills, financial accounts, deed to your house, etc. should be easily accessible to your next of kin. How else will they find all of this stuff? You may have all of this information in your head but when you are gone, so is all of the information you carried with you.

  • Don't die with secrets. We all have secrets--passwords to our many online accounts, a hidden "slush fund" that we access for emergencies, sometimes there's a spare kid that the current spouse doesn't know about--whatever your secrets, consider how they will impact your spouse and your family after you are gone and make appropriate arrangements to straighten out any mess that many come up after you die.

I think that about covers it. If you have a current Will, adequate life insurance, little or no debt, a spouse who has been an equal partner in the running of your life together, organized paperwork, and a way to reveal any necessary secrets after you die, you will give your spouse the gift of being able to grieve your loss in peace instead of grieving while they are being evicted out of their home, walking to the food bank because they have no money and the car has been repossessed, and cursing you and themselves for the mess they are now in.


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