Let’s Get Really Real

Let’s Get Really Real

I try my best to be as positive in all aspects of my life as I can. From my personal relationships, to work, to writing these weekly articles, I believe wholeheartedly in the power of positive thinking. So as you can imagine, when I’m asked questions about the financial implications of death and divorce it can be quite a challenge to put a positive spin on it. I may be annoyingly optimistic, but I understand life can suck sometimes. No one is immune to personal hardship.

Do I want to talk to you about preparing financially for death and divorce? Ummm no. I really don’t. But I’m going to, because we need to accept the fact that these things happen. If you’re lucky, you won’t ever deal with divorce. If you’re lucky, you’ll also live to be 100 and die peacefully in your sleep with millions in the bank.

The following tips are about providing yourself, and your family, with peace of mind and not becoming a posthumous financial burden. Honestly, I’ve thought a lot about how to address death and divorce with empathy, honesty, and humor with clients. It’s not easy, but we all need to hear it.

So What Happens When I Die?

I don’t know where we go when we die. I hope heaven is Fenway Park on a warm June day. Ideally, I’ll have access to unlimited pizza from Regina’s and cold Sam Summers (sorry for being a stereotypical Masshole).

Unfortunately, I do know what happens to families when a loved one passes away and a will isn’t there to divvy up assets. Or what happens when family has to scrape enough money together to afford a funeral. It makes the grieving process even more terrible.

1) You Need a Will

For a few hundred dollars (usually) you can legally decide how you want your assets distributed, who gets what, and who is responsible for carrying your wishes out. I can’t tell you how important this is. When you die without a will, how your assets (bank accounts, retirement accounts, real estate, etc.) are distributed is dependent upon the state you live in. Usually the laws favor the spouse or domestic partner.

With a will, you get to decide exactly how you want your most valuable assets to be inherited. Why leave what you worked your whole life for in the hands of the state? This is also where a lot of stress and contention can happen among family members. Your family is already grieving, why make it worse?

Also, you can make it clear in your will if you’d rather be buried, cremated, or cryogenically frozen for science (*raises hand*). After I’m cryogenically frozen, I’d like my family to throw a massive kegger with a live band in celebration of my whimsical life. It would be preferable if Oprah, Tina Fey, and any available members of the New England Patriots could attend. Mark this as my first feeble attempt to lighten this article up.

2) Have an Honest Discussion

We all know communication is key to any solid relationship. If you have specific wishes in dying and death, you can’t expect your family to know unless you discuss it with them. Some other points to consider discussing with your closest relatives: How will funeral expenses be paid for? Is there a will? Who is inheriting what and is it specified in the will? Other than discussing sex with my parents, I cannot think of a conversation I’d want to have less. Alas, we all know the importance of a parent explaining the birds and the bees. This is no different.

3) Dying Isn’t Cheap

The average cost of a funeral in the United States last year was closing in on $7,200. That’s outrageous. Because $7,200 isn’t exactly chump change, it’s going to be important that your spouse or kids know ahead of time how expenses are to be paid.

4) Keep Beneficiary Info Up to Date

Your bank, retirement, brokerage accounts likely all have the option to name specific beneficiaries (the person or people who will directly get those accounts should you pass way). The beneficiary information needs to be accurate and up to date in order to avoid a legal-shmegal mess. Also, let’s make sure your will and beneficiaries are consistent (beneficiaries override the will).

Let’s move on to something less morbid. Divorce!

If you are about to file for divorce, or are in the middle of a divorce, here are some tips:

1) Be Organized

You really need to know what is yours, what is your spouse’s, and what is jointly owned as far as your assets go. Get your financial documents gathered and organized in case there’s any questions regarding assets and liabilities during divorce proceedings. Be in the know! The more you know about your financial situation, and how it’ll change, the less overwhelmed you’ll feel during this transition.

2) Know Your Credit Score

Take a look at your credit score during and after your divorce. Make sure any disputes are resolved and your ex isn’t using joint credit cards you’re trying to dissolve.

3) Get a P.O. Box

This one is about protecting yourself and your privacy. You’ll probably be getting correspondence from attorneys and other professionals, a P.O. Box will help ensure they get to you and you’re the only eyes reading them.

4) Save, Save, Save

Divorce is freaking expense. If you know you’re heading for Splitsville, start putting away money now. You’ll be paying legal and other professional fees, but you’ll also be on your own paying for everyday living expenses. Having money put away ahead of time can help ease the blow.

5) Change Your Beneficiaries/Will/Medical Directives

You’re probably not going to want your ex-husband/wife to be the recipient of all your accounts anymore, so you’re going to need to update your beneficiaries, will, and any medical directives you may have. Ugh tedious, I know.

5) Get Your Own Accounts

If you’re divorcing you’re also going to want to open your own checking and savings accounts, as well as a credit card in your own name.

6) Prepare to Downsize and Cut Expenses

This might be one of the rougher parts of your divorce transition. You’ll be providing for yourself now and you’ll likely have to adjust your expenses. Often that means having to downsize and learn to live within your new means. A financial planner can help you make the appropriate adjustments.

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Death and divorce are two of the most painful events life can throw at you. While we hope our experiences with both are minimal, if you are prepared financially, the transition to the next chapter in your life will be a bit smoother.

I’m sorry for being a Debbie Downer with this one. Next week we’ll get back to some fun stuff. If you have any questions about estate planning, divorce financial planning, or just want to shoot the shit, please feel free to contact me (catie@hoganfinancialplanning.com).

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