How to Prepare for the Death of a Healthy Spouse

Some things in life require planning, no matter how unpleasant the thought. Preparing for the death of your still-healthy spouse is one of them.

Simply buying a life insurance policy isn’t enough. You need to make sure that both you and your spouse are prepared for the legal, economic and psychological consequences if one or the other passes away. Here’s how to make sure the surviving spouse will remain financially secure after one spouse dies.

Consolidate accounts. Many older couples have accounts at multiple financial intuitions. “Everything is very spread out,” says Tatyana Bunich, president and founder of Financial 1 Wealth Management Group in Columbia, Maryland. “The very first thing we do in our process is to consolidate accounts.” Fewer accounts makes it easier to track and manage your finances. “When [a death] does happen, the more accounts, the harder it is emotionally,” Bunich says. “The paperwork involved to put in death claims for every institution is overwhelming.”

[Read: A Couple’s Guide to Retirement Planning.]

Talk about finances with your spouse. Sometimes one person in a relationship handles the finances. “In spousal relationships, it is not uncommon to have a divide and conquer approach,” says Mindy Rosenthal, national managing director of the PNC Center for Financial Insight. “One spouse takes care of some things, and you take care of others.”

But it’s essential for both members of a married couple to have at least a working knowledge of household income and bills. Kameron Besson, partner at SignatureFD in Atlanta, says the husband often manages money for the household. “Given that females are living longer, I work a lot with the surviving spouses,” he says. “It’s important that the husband communicate that knowledge and [financial] relationships so the spouse can understand.”

Take inventory. Make a list of the financial institutions where you have accounts and the account numbers. “Start with ensuring that there is an inventory updated annually of all accounts, with account numbers and the contact information,” says Eric Bailey, president of Bailey Wealth Advisors in Silver Spring, Maryland. “Far too often, one spouse doesn’t really know all the equations. If they do know, generally they don’t know the account numbers and the contact person.”

It can also be helpful to write down your household assets, incomes and bills. “It’s not uncommon for couples to have multiple bank accounts, mortgage, insurance [and] retirement plans,” Rosenthal says. “They also have monthly bills and an accountant or financial advisor. Any couple should keep records of where all pertinent information is.”

Remember to include a list of the bills that need to be paid and how to pay them. Part of your inventory should include information on cash flow, income statements, where the money comes from and who needs to get paid so bills don’t get behind. “Put it on some kind of disk or thumb drive and put it in a safety deposit box,” Bailey says.

[Read: How to Prepare for One Spouse’s Retirement.]

Check beneficiary designations. Even if you have a will, your beneficiary designations will supersede the will. People often make their mother the beneficiary in their first jobs and have not changed that, even if they have been married for years, Rosenthal says. “There have been instances where benefits went to ex-spouses because the beneficiaries were never updated.”

Double-check your beneficiary designations to make sure the correct people inherit your wealth. “A lot of people have worked for a company for 30 or 40 years and never checked the beneficiary designation,” Bunich says. “I just had a guy who had no beneficiary designation and had $560,000 in his account and a second marriage on the books.”

Figure out how much income the surviving spouse needs. Retirement income might drop significantly after one spouse passes away. “For many couples, there could be a drastic reduction in income, especially if it is the husband passing away,” Bunich says. “Typically speaking, in the generation passing away, the husband was the breadwinner and had the higher income and the pension.”

Some surviving spouses are fortunate that the spouse with a pension checked the box on the pension that lowers the monthly check, but ensures that the surviving spouse receives a pension for life. But not all pensions provide that option.

Take a look at your liabilities and how you will cover them in the event something happens to one spouse. “We have to figure how much income they will need without the second spouse,” Bunich says. “We have to look at Social Security, if they have their own pension and dividends.”

[Read: How to Pick a Beneficiary for Your 401(k) Plan.]

The household may also go from having two Social Security checks to just one after a spouses dies. “The big thing that happens to older couples when something happens to one of them is they lose that spouse’s Social Security,” Rosenthal says. “Your income will drop a lot. You want to look at how you’re going to replace that.”

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How to Prepare for the Death of a Healthy Spouse originally appeared on usnews.com