WIDOWS FACE ADDITIONAL CHALLENGES, BEYOND FINANCIAL ONES
When a partner dies, life changes immediately, and for women excluded from financial planning, the shift can be overwhelming.
Whether death is expected or not, when it occurs, it leaves behind turmoil, confusion and many potential pitfalls. Unfortunately, in South Africa, many women are still excluded from financial discussions and crucial financial planning. This generally results in more challenges for widows than for widowers.
Let’s face it, there is no easy fix to reduce the heartache and pain when a partner or loved one passes away. When someone becomes a widow, many responsibilities and obligations are transferred to her.
Life as previously known changes immediately and profoundly as status shifts from married to widowhood. A new widower experiences the same challenges.
Read:
From provider to planner: Helping your spouse prepare for life without you
Guiding clients through life’s transitions: The role of financial planning
73-year-old widowed retiree with R12m life cover: What are his options?
To keep emotional turmoil in check, start the grieving process, and adapt to her new life, it is crucial that, from day one, every widow knows what to expect.
There will be confusion and borderline chaos; it is almost inevitable, but much of this can be softened and even eliminated by understanding what must be done, what can be ignored, and what must be avoided.
Grieving is part of the life-changing event and process. People grieve differently, and it is important to take time (and be given time) to grieve.
For some, life becomes easier within weeks. For others, it takes years to return to some form of normal life. For widows who struggle to overcome the loss of their loved one, moving forward will be challenging.
It will help to find someone who can assist with financial restructuring and, where applicable, the transfer of assets. Some counselling will go a long way towards the rebuilding phase.
Widows are unfortunately faced with more than just emotional challenges. Sometimes, the administrative and financial planning burden that follows the passing of a spouse can be very challenging.
Read:
The uncomfortable process of a death claim on a retirement fund
What happens to a living annuity when the annuitant dies?
One of the challenges most widows face when their partner passes away is the mountain of paperwork that needs to be completed. The required paperwork can lead to further frustration and confusion.
Paperwork goes beyond the documentation required by the authorities. Every asset, contract, loan, investment, and retirement product held by the deceased must be addressed.
Many of these will be dealt with by the executor of the deceased’s estate; however, the burden to restructure and reorganise her own life will remain the responsibility of the widow.
In some cases, the widow is the executor of the estate, placing even more pressure on her. The marriage regime will also determine the complexity of the paperwork.
In some cases, the widow will have to make decisions, some of which will be financial decisions, and the more complex the deceased’s estate is, the more decisions will have to be made. Even previously mundane paperwork and routines may become challenging and confusing.
It sometimes happens that a struggling widow’s adult children may be approached to answer questions and asked for direction instead of the widow being treated as the primary decision-maker. This also results in more mental turmoil, leading to a feeling of being left out.
It is important to know that every widow in early grief experiences “fog” and at some point feels overwhelmed. Everything does not have to be solved on the first day or in the first week.
Read: Retirement annuity death benefits: The rules your will can’t override
Figure out what matters most and prioritise what needs to be done first. Widows must let their circumstances and priorities guide the process in a way that is manageable to them.
When a woman’s husband dies, she experiences a shift in her identity, responsibilities and decision-making. Often, her inheritance includes tasks, paperwork, deadlines and financial choices she had not previously managed on her own.
Even the most astute and capable widow can become disoriented under these circumstances. Widows often experience a drop in financial confidence after a loss.
Incorporating understanding, a structured estate finalisation/transfer process and a support base may reduce and repair this.
A common mistake is trying to do too much too soon. Widows must accept that they may experience a loss of confidence and difficulty in processing information shortly after their spouse’s passing.
Decision-making energy may also fluctuate. Widows need to establish steadiness, clarity and a process they can absorb. Try the following framework that Kathleen Rehl PhD refers to as SAFE (a guide for advisors as well):
Phase 1: Stabilise (Advisor: Presence before planning)
Acknowledge the loss
Talk to somebody
Separate emotional from financial issues
Determine income continuity and short-term liquidity
Request death certificate and certified copies of the certificate
Identify the executor
Handle urgent bills and asset access
Phase 2: Assess (Advisor: Clarity, the new reality)
Assess emotional readiness and cognitive load
Review the income picture
Clarify what will change financially
Identify what assets will change by beneficiary nomination
Identify assets that will be subject to estate duty and the transfer timelines
Identify tax liabilities
Phase 3: Focus priorities (Advisor: Identify what matters most next)
Decide on the most timely next steps
Determine housing, insurance, debt, etc
Narrow attention to issues that matter most immediately
Determine trade-offs
Own estate planning updates
Phase 4: Empower (Advisor: Move forward with thoughtful action)
Confirm readiness before implementing changes
Put tax, portfolio, income, and estate updates into motion in phases
Avoid stacking too many changes at once
Set goals, preferences and ask questions
Acknowledge that the role of financial decision maker has transferred
Research shows that while 80% of men will die married, 80% of women will die as widows. This underscores the importance of women’s involvement in the family’s financial affairs and of planning more intentionally.
It is very likely that, at some point in their lives, most women will have to make important financial decisions. This task will be less challenging if they gain a solid understanding of the family’s financial affairs as early as possible.
A common trend in estate planning is for spouses to be nominated as the executors of each other’s estates. Given the complexity and time constraints of winding up an estate, it may be wise to avoid this trend, especially if the emotional challenges a widow will face are added to them.
It also makes sense to appoint an executor who knows the family and understands the family dynamics and potential challenges that may be faced during the winding-up process.
Equally important is ensuring that widows have a professional support structure. One that will support her in all aspects of financial planning and the estate winding-up process. This is particularly important for complex and large estates.
Setting up the new structures and protecting the widow from unscrupulous people and from making bad financial decisions can make or break her financial future.
Money attracts attention. Widows must be cautious about what they tell whom. Money has the ability to draw ‘needy’ (greedy?) people out of the woodwork. Women are generally givers and nurturers, but they must be wary of being taken advantage of. One of the most difficult traits many widows have to learn is to say no!
I would like to suggest that all married couples discuss what the future will look like for the surviving widow. Talk about who the support team will be and include the future advisor in the discussion.
It is much easier to talk about what all parties would like, and importantly, what they would not like to experience, while everybody is healthy and of sound mind.
Read: Unequal futures: The financial reality of women’s retirement
Meet the future executor and discuss the estate winding-up process in detail so that there are no misunderstandings or unrealistic expectations.
The estate winding-up process is cold, especially if the administrators and executors do not have a close connection with the surviving spouse. If the executor is not known (for example, when a bank or an insurer is nominated as executor), consider nominating your financial advisor as the mediator between the executor and the widow to soften the process.
Many advisors have expanded their expertise to include coaching, a skill that will come in handy as widows face the challenges of their new status.
Widows and families are welcome to reach out to us if they need guidance.
Take care.
