By Alaina Trivax, WCI Columnist

During my early childhood, my father was the primary earner for our family. He worked for the US Department of Agriculture and traveled often to conduct produce inspections. My mom stayed home to take care of my younger brother and me. When we were still quite young, though, my dad was diagnosed with lung cancer and ultimately passed away. In the wake of this, my mother had to manage her own grief and care for my brother and me while also taking on the role of financial provider and manager.

She ended up getting a job as a paraprofessional in our local school district. The position had a great schedule for someone raising two kids on her own but didn't necessarily pay well. Now that I manage the household expenses for my own family, I’m amazed at how she made things work. She sheltered her children from any financial concerns until we were much older. We didn’t live extravagantly by any means but still had a happy and stable childhood.

As you might imagine, that experience impacts how I now approach my own family’s financial management. My husband, Brandon, and I are currently maxing out our retirement contributions while also aggressively paying down his medical school loans. He is just a few years out of training and is employed as a PM&R attending; I teach middle school English. Balancing our priorities—saving for our future and paying off debt—certainly requires some sacrifices, but we keep at it because of our family’s goals. Once the student loans are paid off, we hope to build or renovate our dream house; things are getting a little tight for our growing family in our current home. We also keep a list of places we’d like to travel with our children as they grow; we’d eventually like to take them on at least one international trip each year.

These plans and conversations, of course, include both Brandon and me. It’s tough to even think about, but there is always a possibility that something could happen to either of us before we get there. We are both actively involved in managing our finances, and we each have roles that the other person doesn’t currently have the skills to execute. This division of responsibility works great for us, but it does leave some vulnerabilities should one of us need to completely take over.

Here's how we think about it.

 

Preparing for the Worst

For us, the first consideration in this planning was to secure life insurance. Given our income discrepancy, Brandon’s death would have a greater financial impact on our family. Our kids and I couldn't maintain our lifestyle on my income alone so we have a term-life policy in place for him. We recently welcomed our second son and are now researching additional life insurance for Brandon. The million-dollar policy that we currently have would give me some cushion, but a bigger payout would provide more financial stability for our kids and me. My salary as a middle school teacher just wouldn’t cut it. We’re trying to find the right number for our growing family—an amount that would cover our mortgage and would have a significant balance that could be invested to supplement my income.

When first considering this, I thought that my death wouldn’t be too significant from a financial standpoint. Brandon’s career is much more lucrative than my job as a middle school teacher, and he has a greater opportunity to increase his income through additional call shifts or other work. He pointed out, though, that he would have to make a few career and lifestyle changes if I passed away. He would either need to go part-time so that his schedule could accommodate caring for our children, or he would need to hire a nanny and increase his income to account for that. Both are doable options but would require some adjustment. With that in mind, we max out the insurance coverage offered by my employer for a policy of a little more than $250,000; I don’t have any supplemental insurance beyond that. This insurance payout would provide a bit of financial cushion while he and our kids transitioned into life without me.

Having watched my mom navigate life after losing her spouse, I know that it’s not enough to just have life insurance. Right now, our family’s financial responsibilities are divided between the two of us with Brandon overseeing our long-term planning while I manage our short-term needs. At this point, neither of us has the knowledge or skills to take over the other’s role. We would need some direction in how to manage these responsibilities. With that in mind, we are in the process of creating “action plans” that the other person could follow if the need were ever to arise.

 

A Plan for Me

Brandon’s information for me will include a list of potential financial planners to reach out to in case I don’t feel comfortable taking over our account management. They will be WCI-recommended advisors that he has already vetted and who he would trust to help me execute our financial plan. I’ve been educating myself on investment strategies, but honestly, I don’t think I could take over that role on my own anytime soon. Even as I learn more, I imagine I’d still be pretty nervous to go at it alone. Without dramatically changing our lifestyle, I would struggle to make ends meet on my salary alone, so managing the balance of his insurance payout and our other investment accounts would be critical.

We’re also creating a written overview of the disability and life insurance policies that we have in his name. This will include policy amounts and who to contact regarding payout. This is information that we already have, but it’s not necessarily organized in the most accessible or actionable format. If I needed to cash in one of these policies, it would be helpful to have it all together. We’re also planning to include information about his student loans, as our current terms allow for the debt to be discharged upon his death. Still, I can’t imagine the process is simple, so having this information in an easy-access format would be helpful.

Finally, we’re going to make a plan of what I should do with any insurance money. This is something we’ll talk through together while referencing our financial plan. Should I pay off the mortgage first? Does that change if we’ve moved to a larger home with a bigger mortgage? Should some of the funds be invested? In what type of accounts? I would only be executing this plan in the event of an incredible tragedy; having made some of the decisions in advance would allow me to feel more confident that my family will remain financially secure.

 

A Plan for Him

My action plan for Brandon will include detailed information on managing our monthly and annual budgets. We currently max out our retirement accounts and aggressively pay down his student loans because I make sure that we stick to a budget that prioritizes those goals. He is pretty far removed from our day-to-day finances right now, and he truly prefers it that way. For our family to continue meeting our financial goals in my absence, he would need to get much more involved in our short-term finances.

Although Brandon is the primary earner in our family, he also would find himself with some additional expenses if something were to happen to me. Given my schedule as a teacher, I am the primary caregiver for our children on weekdays, holidays, and in the summer. His work schedule will not have that same flexibility; he would need to reduce his hours or find some sort of supplemental childcare to fill in those gaps. He’d also need to outsource many of the household tasks that I currently manage. Finally, he and our sons would need to switch to his healthcare plan which is significantly more expensive than the insurance we currently have through my employer.

My life insurance policy would offset at least some of these additional expenses and give him a buffer to work with while figuring things out. I plan to consolidate the information for this policy—including who to contact for a payout—so that he could collect the funds as easily as possible.

 

Account Access

On a logistical note, we also have documented our logins for almost every account and have this information stored in a secure place. This includes our financial accounts and the information to access our email accounts. It seems like new logins always require some sort of verification, so having access to each other’s email accounts would be necessary if one person needed to manage everything.

spouse death preparation

For a few accounts, we actually know and sometimes use each other’s login information now. For example, my teaching job gets us a discount on our home and auto insurance. Brandon manages our insurance, so he signs into my email for verification codes when they’re needed. Logistically, this just works for us. We’re not always available at the same time to do these kinds of administrative tasks, and this makes things a little easier.

Unrelated to our finances, our login list also includes information for our social media profiles and other personal accounts; these accounts aren’t necessary for financial management, but having access to all of this could make things just a little bit easier in the event of one of our deaths. The information for all of our accounts is stored in a single location, but it’s just assumed that neither of us will be signing into the other’s Instagram unless it's actually necessary.

 

Fingers Crossed, We’ll Never Need These Plans

After my own father’s death, my mom kept things consistent for my brother and me–we stayed in our family home and always had the food and clothes that we needed. Of course, Brandon and I hope that our preparations are unnecessary, and we never need these plans. In the event of a tragedy, though, we want our children and the surviving spouse to still be able to fulfill those dreams we’ve talked about—the house with a big yard, the annual family trips, and more. We hope this additional bit of preparation, beyond just securing life insurance policies, will have ensured that their lives will remain financially secure if the worst ever happened.

Have you made plans in the event your spouse or partner dies? Do you have enough life insurance? Do you have the expertise to take over the other person's role in your family's financial structure? Comment below!