When it comes to end-of-life preparation, taking the initiative is key. After you pass away, your spouse will undoubtedly be overwhelmed with emotions. Even the most mundane tasks, like running errands and staying active, may be challenging for them to keep up with. In this state, managing new financial obligations could feel nearly impossible. However, with some advanced planning, you can give your spouse a solid foundation for assuming control of your finances after you’re gone.

This proactivity will help them transition into the next chapter of their financial life when the time comes. It will also give them invaluable peace of mind for today, knowing that plans have been made for this inevitably difficult period.

This is a two-part plan: First comes the prep work you can handle now. Second is creating a to-do list for your spouse to execute after you're gone.

Prep Work #1: Get Organized

After something as devastating as your death, requiring your spouse to parse through confusing financial statements is certainly not ideal. Luckily, this situation is almost completely avoidable.

If you're not organized, there's no way that your spouse will be, so our first phase of prep work is devoted to getting organized. The most important part of the organization is creating a "financial inventory," or a comprehensive master list of all your accounts, assets, and balances. By bringing all loose ends together, including institution names, log-in information for online accounts or digital assets, and other details, you'll reduce future headaches for your loved ones immediately.

When you're collecting records of your financial assets, you can also take the opportunity to gather important, non-financial documents such as property deeds, vehicle titles, official certificates, investment account paperwork, information on debts, insurance coverage/policy numbers, etc. Be sure to include contact information for anyone who manages your finances, such as insurance brokers, attorneys, or financial advisors. For each contact, describe what assets or legal documents they work with so your spouse knows whom to call with questions. Include notes for each account, like required minimum balances, to help ensure your spouse isn't surprised by additional fees. Additionally, make a note of where documents are kept, dates they are updated, etc.

After you're done organizing, these records and documents should go somewhere secure, like a safe deposit box or fireproof safe. Keep the momentum up by checking your list once a year to make any necessary changes.

Looking forward to financial confidence? Schedule your complimentary consultation with a Wealth Enhancement Group advisor.

Prep Work #2: Update Your Documents

During your organization step, you may encounter some "surprises"—those financial items you'd forgotten about and can now deal with. Even if you didn't find any surprises, getting a fresh look at some of your old documents can serve as a helpful reminder of what you've already set up and where you're still lacking.

You'll want to keep track of a few key estate planning documents as you prepare your organizational foundation.

Living Will & Last Will: Why You Need Both

Many people are familiar with a last will and testament—commonly known as just a "will." This document describes how you wish to distribute your assets after you die, carried out by a named executor. A will is often used in conjunction with power of attorney, which designates someone to manage your finances if you can't.

Conversely, a living will is a part of your health care directive. A living will is a legal document that spells out your preferences regarding medical treatment in case you become incapacitated. This document often pairs with a medical power of attorney or health care proxy—the person you name to make medical decisions on your behalf in this situation.

As you organize, ensure that your wills, health care directives, and other important estate planning documents are up-to-date with your current wishes. After communicating your final wishes to your spouse, be sure they know where these documents are located so they can access them in case something happens.

Conflicts Between Wills and Named Beneficiaries

Many people must realize that the beneficiary designation wins if there's a conflict between your will and a beneficiary designation, such as on a life insurance policy or retirement account. For example, if your will states all your money will go to your children, but you have an account naming your ex-spouse the beneficiary, your ex will receive what's in that account—despite whatever your will states.

Assigning beneficiaries isn't a "set it and forget it" type of event. As you organize your documents, verify that beneficiary designations align with what you've written in your will. As changes occur in your family life, such as marriage, divorce, and new children, double-check your designations and change them if needed.

Creating a Financial To-Do List for Losing a Spouse

Now that you've organized your finances and updated your documents, it's time to create the financial checklist for your spouse to execute step-by-step after you pass away.

Step 1: Notify Relevant Parties

Ensure your spouse knows whom to contact immediately after you pass away, including the three major credit bureaus, the Social Security Administration, banks, credit card companies, insurance providers, and other organizations associated with your assets. Your spouse can access the lists you created during the organization step to notify these institutions.

While some organizations will accept death notifications without a certificate, others can be particularly stubborn about the process to reduce the chance of fraud. For this reason, it will be helpful for your spouse to get more death certificates than they think they need.

Step 2: Gather Essential Documents

Your spouse will then need to collect all of the essential documents you prepared for them. Provide clear instructions about the location of these documents and how to access them easily. If you rely on digital storage methods for your documents, ensure you've recorded the correct account information. Otherwise, your spouse might get bogged down trying to prove their identity to an institution just to log in.

Step 3: Assess and Review Financial Obligations

After notifying the relevant parties and gathering the essential documents, your spouse will need to evaluate your outstanding financial commitments. These may include mortgage payments, credit card balances, outstanding loans, and other debts. If you are the sole manager of any of your family's liabilities, provide your spouse with all the relevant information. By clearly outlining your financial standing, your spouse can plan accordingly.

Step 4: Develop a Budget

Admittedly, planning a budget for your spouse after you're gone isn't foolproof—you can't predict the future. However, you can provide them with a solid foundation from which they can create their own budget and work towards financial stability.

If you are leaving your spouse sources of income or assets, such as Social Security benefits, life insurance payouts, and retirement accounts, identify these and provide detailed documentation on how your spouse can best use them to continue their life. Your spouse can also transfer your other financial accounts and assets into their name at this time.

If you handle the expenses of your household, such as utilities, health insurance, or vehicle payments, provide a summary of how much you have been paying so your spouse can get an idea of what they'll need to earmark for expenses in the future.

Step 5: Consult with Professionals

Hopefully, your financial advisor is one of the "relevant parties" your spouse contacted during Step 1. However, it's important to encourage your spouse to continue their relationship with your financial advisor as they continue to rebuild their life.

Financial advisors are the secret sauce that will help your spouse execute their plan effectively. For example, when designing a budget that relies on new income streams, a financial advisor can help your spouse navigate tax planning related to that income. If you have debts that your spouse will need to manage, a financial advisor can help structure payments harmoniously with other parts of their financial plan. Working together, your spouse and financial advisor will be able to make informed decisions that help them prepare for the future.

Get Your Spouse's Plan in Place

In the midst of grief, providing your spouse with a baseline financial checklist will lift some burdens off their shoulders. It's not rocket science—these are straightforward steps you can take today to help make your spouse's life easier after you pass away.

However, just because it's straightforward doesn't mean it's easy. Planning for end-of-life can be a touchy subject, and many people put it off because it's uncomfortable to think about. Working with a financial advisor to create these plans can ensure that they're made effectively—and that they'll actually benefit your spouse after you're gone.

Your plan will strengthen with the support of someone who has been through this process before. Reach out today for a free, no-obligation meeting with a Wealth Enhancement Group financial advisor to kick-start your planning process. Together, we can create a legacy of financial security and peace of mind for your spouse—no matter the circumstances.

The opinions voiced in this article are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.