Losing a family member can be tough but losing the one you spent your life with can be devastating. Whether it is a sudden loss or one that you had time to prepare for, it is never easy. Add on top of grieving all the arduous things you must do with a loved one's finances after they pass and that's a recipe for failure.
We are tied to those individuals in more than just an emotional basis. We are financially tied to them and this can cause some headaches after a loved one is gone. We share bank accounts, credit cards, cars, homes, lines of credit, debt and so much more that it becomes difficult to track. We will give you some pointers on how to prepare if you are ever faced with this situation.
The first step is to organize, organize and organize. Have a list, spreadsheet or something that has every single financial account on it. No need to put amounts, you just need to know what each of you have together and separately. For some this may be a challenge because of a secret gift giving bank account or a store credit card that the wife doesn't want the husband to know about. That is ok to have those and in fact we encourage you to!
Once you have compiled your list go through and see who owns or is the primary on those accounts. If there is no one listed as a second account holder, transfer on death agreement or authorized user please go through and see what makes sense for each type of account. A great example of this is credit cards. A joint credit card allows both owners to charge and use the card, but both are responsible for the debt incurred. A credit card where there is a primary cardholder with an authorized user allows both to use the card but typically the primary is responsible for the debt. There are however advantages and disadvantages to both. With a joint card if one person dies the other party is liable for the debt which is a disadvantage. An advantage of joint cardholders is that each person gets the points, when one dies the card stays open, and it is linked to your own credit score. If you are an authorized user the advantage of not having to pay the credit card debt is extremely helpful when the other party passes, but it could leave you vulnerable to no credit card (most companies will close them after the owner dies) and it could be detrimental to your credit score. *Keep in mind that laws are different in each state and each company may have a specific process of how to handle death of an account holder. This was merely an example. These are the types of things to consider when adding on another party to your accounts.
After you have figured out who will be joint or an authorized user please go through and make sure that if you have beneficiary designations on accounts, life insurance etc. that those are updated accordingly. Providing a beneficiary will help companies know where the funds need to be dispersed and makes it easier on your loved one when handling everything. Best practices would be to name your spouse, partner, or significant other as the primary and then name your trust (if you have one) or estate as the contingent beneficiary.
Last things are to make sure when your loved one passes that you have certain documents readily available. This is a job for the loved one before they pass and for you after they have gone. Prepare a proverbial "death binder" that list out everything about the person from bank accounts to insurance policies, subscriptions, and even social media. This way you can begin the tedious task of making sure to stop automatic payments and know who to inform. Having multiple copies of a death certificate is key because a lot of companies require that. If you are joint, you can call and be made the primary on the accounts and take over payment responsibilities.
The passing of your soulmate is difficult but hopefully this can help ease the burden of taking care of their estate. There are plenty of helpful resources out there that can help with this transition. If we have learned anything from the past it is to be overprepared.