Published in the February 4-17, 2015 issue of Morgan Hill Life
By Marisa Otto
Marisa Otto
Valentine’s Day is almost here. And while it’s certainly fun to give and receive chocolates and roses, why not go a little deeper this year? Specifically, if you are married, consider using this commemoration of love as a starting point for taking care of your spouse in the future — even if you’re not part of it.
Actually, both you and your spouse could designate Valentine’s Day as the beginning of your joint efforts to provide financial security for the surviving spouse when one of you is gone. Your strategy should involve at least these three key elements:
Understanding your household’s finances — In some marriages, one spouse handles all the household financial matters, including investments.
If this person were to pass away first, it could leave the surviving spouse with the dual responsibility of managing day-to-day finances and tracking down all investment information. These tasks could be overwhelming to someone who is unprepared to deal with them, so you’ll want to take steps to ensure you and your spouse are aware of your joint financial picture. For starters, keep good records of all your financial assets, including investment accounts, life insurance policies and legal documents — and make sure both of you know where these records are kept.
Also, if you use the services of a financial professional, it’s a good idea for you and your spouse to meet regularly with this individual to ensure both of you know where your money is being invested and how close you are to achieving your financial goals.
Creating a future income plan — You and your spouse should discuss your sources of income and identify which ones are specifically tied to each spouse and may be affected by a death, such as pensions and Social Security benefits.
You’ll also want to talk about options to boost future income upon the death of a spouse.
Do you have adequate life insurance?
Have you considered investments that can be structured to provide a lifetime income stream?
Have you thought about having the higher-earning spouse delay taking Social Security to maximize the survivor benefit for the surviving spouse?
These are the types of questions you’ll want to answer as you think about providing adequate income for the partner who outlives the other.
Leaving a legacy — If you and your spouse haven’t already done so, take this opportunity to discuss your estate plans.
For example, you may want to talk about the need to consult with a legal advisor to determine if you, as a couple, could benefit from setting up some type of trust arrangement. You should also discuss how, when the time comes, you want to handle any retirement assets, such as IRAs, that were titled in the deceased spouse’s name.
Do you both want the assets to immediately roll over to the surviving spouse, or should you name your children as beneficiaries?
Estate considerations can be complex and involve many different aspects of your financial resources. So you and your spouse need to be “on the same page” with your desires and goals.
Valentine’s Day will come and go quickly. But if you use the occasion to start having the types of discussions described above, you can create something that will last a lot longer than candy or flowers.
Marisa Otto, CFP®, Financial Advisor, Edward Jones U.S.A., can be reached at (408) 778-4400 or at [email protected] or visit www./edwardjones.com.
