Erin: Jordan, it’s really good to see you. And we have a very important topic today. Five financial blind spots that can burden a grieving spouse. The loss of a spouse is overwhelming, and for many survivors, it also brings unexpected financial surprises.
Let’s talk through the top five blind spots. Number one is surprise debt. Many surviving spouses are caught off guard by debts they didn’t even know existed. How can couples avoid that surprise?
Jordan: Yeah, this comes with communication. You got to make sure we encourage both spouses to meet with us when they come into our office, so we know the plan. We know what’s going on. Sometimes people get blindsided by this debt because one person in the household takes the lead financially and they didn’t know about this debt. We want to make sure that we educate, we have a plan, but communication is key because no one wants to get that bad news or be blindsided by debt that they weren’t expecting.
Erin: Great communication, good advice for any stage of marriage.
Next, we want to talk about being locked out of accounts. It’s not uncommon for a surviving spouse to face delays accessing money when accounts are frozen or tied up in probate. How can those delays be avoided?
Jordan: Yeah, we want to make sure we do good estate planning. And that goes. You know, not just for the spouse, but also for the children and maybe grandchildren. But make sure we know how to log into all these accounts. Again, like I said before, one spouse usually takes the lead in this. We encourage whoever takes the lead or whoever has that document with all their passwords. We ask them to put that in a private file in our client portal, so that if something happens to that spouse, we can help the other spouse retrieve that so they know how to log into things, where to access these things. Maybe make sure they’re both on different checking accounts as well. Just make sure there’s no issues with accessing those accounts if something happens to their login.
Erin: Next, invisible credit records. Some widows discover that they have little or no credit history in their own name. So what steps can couples take to ensure that both have established credit?
Jordan: Yeah, we want to be both on different accounts. Maybe when we open a credit card, not just have it in one spouse. I’d like to always use a second spouse or open up a new credit card. I’m a big points guy. So like if you use, you know, each spouse opens up a card, they can each get bonus points as long as you pay off that credit card at the end of the month, but that allows you to see the map behind me. You can travel the world. You can do a lot of things and do it for free. So utilize that to get your credit score up. Maybe get some free trips and some points, but leverage both spouses credit, not just have it one sided or over weighted on just one spouse, because that’ll open up opportunities for the other spouse. If one were to pass that they have that established credit history.
Erin: And the fourth surprise is the reality of a new budget. When one spouse handles all the finances, the true cost of daily life can be eye opening.
Jordan: Yeah, it’s a shocker for a lot of people. Even married couples, they don’t always know one hundred percent where each dollar goes. So I recommend at least every quarter. Just reevaluate. Where’s the money going? Is there any leaks? What’s going on? And for that surviving spouse, they don’t want to get blindsided by not knowing what their budget is. Plus their, you know, expenses don’t really go down drastically after they lose a spouse, maybe a little bit less in food, but you got the utilities, you got maybe the mortgage you got, you know, property taxes, those expenses are pretty constant. You got to make sure, you know your budget now and especially after you lose a spouse.
Erin: And then next we have higher tax brackets after loss. This is also known as the widow’s tax. Why is that?
Jordan: This is the biggest blindside I think that a lot of people do not know. But if you lose a spouse that very next year, you don’t get filing married jointly, you get single tax filing. As you see in this chart, you can almost say your tax is effectively double because instead of going up to one hundred and eight, one hundred thousand eight hundred dollars, now anything over fifty thousand four hundred is taxed at that higher twenty two percent rate.
So people need to have a plan. And this is why when taxes are relatively low, while you’re married, filing jointly, you should at least consider–And we’ll be doing a lot of tax planning– using Roth conversions, moving money from an IRA to a Roth to pay the least amount of taxes over your lifetime.
Again, none of us know our expiration date, but it also protects the spouse that eventually loses somebody that make sure they’re not blindsided by more RMDs or more additional taxes. While taxes are low while we’re married, filing jointly, if you love your family, if you care about paying the IRS less and giving more to your kids, let us create a tax plan to benefit that will.
Erin: Right. No one likes talking about the end of life, but when it comes framed, like you said, Jordan, of taking care of your family, making sure that your spouse isn’t caught off guard, it really helps. And again, proactive planning is key. So if somebody wants to sit down with you, Jordan, make sure they and their spouse or family, everybody’s on the same page. What’s the best way to reach you?
Jordan: Yeah, I’ll first say it’s out of love that you want to do these things. And yeah, watching this and hopefully we can help you out.
I’ll also say we have a lot of clients that are widows. Some of them came to us before they lost their spouse. Some of them, you know, they were in a tragic situation. We helped them get through that. But at the very least, if anyone watching this, they want to talk to some of those widows and see what they experience. Happy to have them reach out to you. Just so you can kind of understand and also help you on the financial side.
But to schedule a time with us 847-499-3454. We care about people. We want to help you, but better prepare now before something tragic happens. But even if you did lose your spouse, we’re happy to hold your hand through the entire process.
Erin: So nice to have an advocate, Jordan. Thank you.
Jordan: Thanks, Erin.
