Financial Planning for Canadians Article: Don't Add Financial Stress to the Loss of a Loved One

Those of us who have lost a loved one know that it is one of the most stressful times in a person’s life. The death of a loved one brings an emotional roller-coaster ride full of shock, fear, confusion and uncertainty. Added to the emotional impact, it’s often a time when serious decisions need to be made, especially where finances are concerned.

Jennifer Black, CERTIFIED FINANCIAL PLANNER® professional, founder of and co-author of Managing Alone, suggests those already facing a loss take three important first steps. First, don’t make decisions in haste. Second, make sure you have a good understanding, financially, of where you stand today. Finally, work with a CERTIFIED FINANCIAL PLANNER® professional to establish a path forward.

The right support can make a difficult and emotional situation easier to manage, and offer a path back to financial confidence and well-being. For example, a qualified professional can help you navigate what may feel like a sea of urgent paperwork. If the deceased was still a wage-earner, you might have to notify their employer, stop monthly contributions based on income, or review company insurance policies, she says.

At the other end of the spectrum, you may also need help managing the financial gift that comes with an insurance or inheritance payout. Before spending the money, a CERTIFIED FINANCIAL PLANNER® professional can help you consider your overall situation and make wise financial choices. “Often there’s a deeper issue underlying the spending,” says Ms. Black, “and it must be addressed to ensure it doesn’t create problems later.”

“When coming into a large sum of cash—whether it’s from the sale of a business, severance or because of a death—until you’ve determined the best course of action, do nothing,” agrees Jason Heath, a CERTIFIED FINANCIAL PLANNER® professional with Objective Financial Partners in Toronto. “Don’t worry that a large sum of money is sitting in a chequing account for a couple of months while you focus on the emotional side of things. Understand that it may take some work and the help of a professional to decide confidently and proactively what to do next to ensure your financial future.”

Dealing with the death of a loved one requires the right support network—not just emotionally, but also financially. A qualified financial planner can help make sure that you are planning for your own financial well-being. Taking a few simple steps before the inevitable happens, whether sudden or expected, can help alleviate some of the financial challenges that often accompany a death.

One of the biggest mistakes couples make is having only one person manage the finances. If that person is not the survivor, they can be left at a loss, says Mr. Heath, citing one extreme where a husband died leaving a wife who had never paid the bills, was unaware of investments and bank accounts, and had no knowledge of rental property holdings.

“It’s important for the non-financial spouse to have at least a basic knowledge of what’s going on financially, while the other maintains a level of record-keeping that makes it easier for the survivor to sort things out,” notes Mr. Heath. “Speak frankly with those around you about your death and what you want to happen. Then organize your financial affairs—before it’s too late,” he says.

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