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Financial tips for surviving spouses

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By Gary Boatman
Wednesday, Oct. 9, 2013, 12:01 a.m.

I am often disappointed, but not surprised when I meet a recently widowed individual.

His or her spouse's advisors often rush in and talk the survivor into buying a REIT or variable annuity. I believe that advisors acting in a client's best interest would suggest taking a few months to digest the situation and have a chance to emotionally adjust. People often regret decisions made at a time of crisis. Certainly there some things that must be done in a timely fashion such as notify Social Security and any life insurance companies that you may have a policy with.

These suspect advisors think it is easy to move the money because the widow or widower is vulnerable and they want to make sure that it is not moved to another advisor. Often, they suggest REITS and VAs because they make large commissions on these products and they claim that they are providing income to the widowed person. Both of these products are very illiquid and hard to get out of at a later time. They both generate a lot of fees.

Product selection has to take place after a complete analysis of the situation. What income will be lost because of the death? What expenses will be lower and which ones will remain the same? What types of insurance and other benefits does the survivor own? How is the cash flow and can it be improved outside of the investments?

There are many other issues that need to be dealt with before moving the investments. Unscrupulous advisors do not ask these questions because they just want a quick buck. Often it is good to have a child involved in the decisions if needed.

These situations point out the importance of good pre-planning. A spouse should be aware of the family's financial condition.

The surviving spouse needs to know what income will cease to come in should there be a death. If both people were collecting Social Security, you will likely lose the lower check if the couple is married. This is because spousal benefits under SS usually allow you to collect the higher check. For non-married co-inhabitants, this will not be the case. Pensions can stop upon a death depending on options selected. The same is true of annuity payments.

Cash flow can be greatly affected by financed purchases such as a luxury car, boat or motor home.

The unexpected death and income loss can really create a cash flow strain. It is very important to have an up-to-date will. If someone has remarried and not changed their will, assets could be distributed to ex-spouses or children and the new spouse could be left with little or nothing.

It is also important for someone who has remarried to make sure that any retirement plans or other documents that have beneficiary designations are up to date. Just changing the will cannot change a beneficiary on a policy.

The beneficiary designation will control who receives the proceeds.

It is important that both spouses know where all financial documents are located, if there is a safety deposit box, have a general idea about monthly cash flow and other pertinent financial information.

To help you with these tasks, we are offering a free 22-page “Life Guide … When a Loved One Dies.”

This will help you organize before the death and give you important information and tips about how to deal with this painful time. To get your free copy, e-mail your name and address to

Gary Boatman is a certified financial planner and a local businessman who serves as president of the Monessen Chamber of Commerce.

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