This is a delicate subject to write about. No one wants to have to plan for a time when we’re no longer here. But as an advisor to retirees, I have a responsibility to try and help you avoid catastrophic mistakes, the results of which would be suffered by your family.

The reason I bring this up now is due to a recent meeting I had with a widow who had lost her husband a few months earlier. Because of bad advice given her by a clerk at a mutual fund company, she set in motion an event which cost her more than half of her husband’s retirement nest-egg. HALF !!!! It went to the IRS in the form of taxes she didn’t have to pay, and more than 25 years of tax-deferral that she could no longer get. This was also a tragedy.

The 2 saddest parts to this story is that a) this error could not be undone, and b) it could have been avoided. Her deceased husband probably thought that his wife would know what to do, or who to contact…but she did not. Or maybe, he just never thought about it at all. DO NOT leave to chance something as important as this. DO NOT leave to chance getting advice from someone who is not qualified to give it. DO NOT leave to chance that the IRS will forgive oversights or errors. They do not…they will not. Do not make these mistakes.

Below are several points that YOU need to consider in order to protect the people you love:

  • Will your pension continue for your spouse? If so, at what percentage? Is that percentage enough for your spouse to live on?

  • Do you have life insurance? Would your surviving spouse need life insurance money to live on?

  • Only one social security benefit will be paid out. Luckily, it is the higher of the two benefits. But, does your spouse need the money from both benefits to live on?

  • If you delay retirement past your normal retirement age, your social security benefit will increase by approximately 8% per year up to age 70. This would provide your spouse a higher monthly check.

  • Does your spouse know when she should take Social Security in order to maximize her benefits? A mistake here will cost her until she dies.
  • What should your surviving spouse do with your 401K? IRA? Brokerage accounts? Does your partner know what thought processes went into making certain investment decisions? Are those investments still suitable now that you’re no longer here?

  • Does your spouse know how to take money from your retirement plans without undue taxation? Loss of tax-deferral? Or, if s/he doesn’t need the money, ways to send the money onto your children or grandchildren on a tax deferred basis.

  • Will your employer health insurance be available for your spouse? How will health care be handled? How will those expenses be paid? Will long term care insurance for the survivor now be necessary?

  • Should your spouse down-size the house? If so, where is the best place to move? How much should be spent on a new home?

  • Are your assets properly titled? Do you have beneficiary designations on all your accounts? Do you remember who they are? Do you know where these forms are located? (DO NOT rely on your financial institution for these forms!!!! Get them in your hands)

  • Do you have contingent beneficiaries?
  • Are all your legal documents in order, and up to date? Will, Power of Attorney, Health Care Directive, Trusts if needed.

  • Does you spouse know where to find these documents?
  • Have you discussed your wishes for your burial?
  • Have you talked to your spouse about all these points? If not, when are you going to do it?

  • Does your spouse know who you would want s/he to contact about your finances if one of you woke up tomorrow morning…and the other did not? Who do you trust to take care of the person you love the most?

  • Is there a need for an attorney to review any of your documents so that your spouse doesn’t make a wrong decision?