My name is Mark Goodfield. Welcome to The Blunt Bean Counter ™, a blog that shares my thoughts on income taxes, finance and the psychology of money. I am a Chartered Professional Accountant. This blog is meant for everyone, but in particular for high net worth individuals and owners of private corporations. My posts are blunt, opinionated and even have a twist of humour/sarcasm. You've been warned. Please note the blog posts are time sensitive and subject to changes in legislation or law.

Monday, August 10, 2015

The Best of The Blunt Bean Counter - Stress Testing your Spouse's Financial Readiness if you were to Die Suddenly

This summer I am posting the "best of" The Blunt Bean Counter blog while I work on my golf game. Today, I am re-posting an October, 2012 blog on stress testing your spouse's financial readiness if you were to die suddenly. This post has proven to be my most impactful blog post ever. It spawned a couple of newspaper articles, led to a BNN appearance, various interviews and has been the topic of several speeches.

Stress Testing your Spouse's Financial Readiness if you were to Die Suddenly

I have written about several morbid estate planning topics on my blog. However, I think today’s post easily ranks as #1 on the morbidity scale.
I will have the impertinence to suggest that you should stress test how financially and organizationally ready your spouse would be should you die suddenly, or vice versa.

Essentially I am telling you to take a financial and organizational walk through your death.

As I don’t want to be known as Morbid Mark, I am going to provide a side benefit of undertaking this morbid task. Girls, instead of the usual headache excuse, tell your guy sure, but first lets stress test your death. I guarantee you will have the night off. Guys, if your wife is taking you to the ballet, just before you are about to leave, tell her you just want to financially stress test her death and I don’t think you will have to attend the Nutcracker.

Seriously though, even with today’s modern families, where both spouses often have some level of financial acumen, most families really give little thought to what would happen if god-forbid one of them passed away unexpectedly.

It is important to understand that this post is not intended for older readers, but to anyone married or in a common law relationship, no matter their age. A 40 year old can get hit by a car anytime, just as much as an elderly person can pass away due to old age. The idea for this blog came about because I realized if I passed away suddenly, I had only partially provided my wife a financial road map or our assets, insurance polices etc. Why I am even cognizant of such a morbid concern is that my father passed away suddenly 25 years ago and if I was not an accountant, my mother would have been overwhelmed trying to find insurance polices, bank accounts and various other investments at a time of intense grief and shock.

Many of the comments I make below were discussed in Roma Luciw's Globe and Mail article Why you should stress-test your finances for a sudden death, so I apologize for any duplication if you read that article, but there are additional links below.

Some of the issues that need to be stress-tested:

  1. If you have pre-paid your funeral or have certain wishes, ensure your spouse is aware of where this information is located.
  2. Does your spouse know where to find a copy of and/or the lawyer who drafted your will? More importantly, is your will up-to-date? If you own your own company, do you have two wills?
  3. Do you have a folder for all your insurance policies? Does your spouse know where it’s located? While in good health, you should prepare a summary of all insurance policies you have on an excel spreadsheet; list the policy number, the insurance company, the type of insurance as well as the value of the insurance and staple it to the front of your insurance folder. You may also want to create a special password protected file (let’s call it the “Information Folder” for lack of a better name) on your spouse’s computer that contains this summary information.
  4. Do you have a list of the assets you own and where they are located? As I discussed in my blog Where are the Assets, you should complete and update yearly a basic information checklist. Again, I suggest a PDF placed in your Information Folder.
  5. As I discussed in this blog on Memory Overload, the use of multiple passwords is so prevalent that you should consider making a list of your key passwords for your spouse, that again is either put into the Information Folder or another more secure location. The objective of this exercise is to ensure your spouse will not be locked out of your various financial accounts because he/she does not know the passwords.
  6. Do you have a contact list for your spouse with the phone numbers and contact information of your accountant, lawyer and financial advisor? Have you introduced your spouse to these people? Again, consider creating a PDF and putting it in the Information File.
  7. Consider any accounts, safety deposit boxes, etc. your spouse may not be aware of. There are various reasons one spouse does not make another spouse aware of these items. However, the reason for their existence is not relevant here, what is important is that you somehow ensure that someone will become aware of the existence of these accounts or safety deposit boxes if you die. 
The above list is far from comprehensive. However, the intention of this blog was not completeness, but to get you to take a step back and consider the unthinkable and whether or not you have prepared the proper trail to allow your grieving spouse to move forward financially with the least amount of stress. I know this is morbid and people tend to procrastinate or ignore anything related to death, but look at this as selfless instead of morbid and maybe you will be moved to act.
This site provides general information on various tax issues and other matters. The information is not intended to constitute professional advice and may not be appropriate for a specific individual or fact situation. It is written by the author solely in their personal capacity and cannot be attributed to the accounting firm with which they are affiliated. It is not intended to constitute professional advice, and neither the author nor the firm with which the author is associated shall accept any liability in respect of any reliance on the information contained herein. Readers should always consult with their professional advisors in respect of their particular situation.

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