According to Keren Birnbaum, a New York estate planning attorney from Schwartz & Ettenger PLLC, another big decision newlyweds should consider making sooner rather than later is to consult with an estate planning attorney regarding the need for a power of attorney and health-care proxy. While some people assume their parents or spouse will be able to make financial, legal, and healthcare-related decisions on their behalf in the event they become incapacitated, this may not be true.

For example, Malka’s husband unexpectedly ended up in the hospital due to COVID-19. He had a disability policy that Malka was trying to access, but since he was sedated and on a respirator, he wasn’t able to sign the forms. He hadn’t granted anyone power of attorney so no one could sign on his behalf, either. Unfortunately, Malka was unable to use the disability money when she needed it most.

Next, it’s important that both parties (women, I’m talking to you here!) are informed about their finances. Ask any financial professional such as myself, or just look at the statistics. According to research done by UBS, a global financial services company (March 14, 2018), 56% of women leave the finances to their husbands. While many problems can arise when only one spouse is knowledgeable about the finances, one of the biggest is that if something happens to the CFO (chief financial officer) of the family, the other spouse is left at a complete loss at what to do once they’re alone.

I’ve witnessed women get up from shivah and have to face the daunting and very painful task of trying to figure out their finances. They weed through drawers and drawers of financial records and old bills, and sift through mail in hopes of figuring out what’s important, and what’s not.

While sometimes the widow can piece together their financial picture using old bills, what if there’s no paper trail because most of the bills are paid online with only the deceased spouse having known the login information? Or, what if only one spouse is listed on the bill? Don’t think that it’ll be a simple process to get information from a company even if you say that your spouse just passed away.

So, what are some easy, practical ways for both spouses to “have a seat at the table” and face their finances as a team? First, they should work together to create a simple “family finances” spreadsheet that both spouses have constant access to. This spreadsheet should list the bills that are paid regularly, (monthly, like utilities and annually, like insurance premiums), when are the due dates, and how they’re paid (via their bank website, mailing a check, etc.). This same spreadsheet can also list their bank accounts, as well as login information to all the important websites.

Second, the couple should decide on a location they both have access to (not one of their parents’ houses) to store important documents such as passports, birth certificates, social security cards, tax returns, etc.

Third, both spouses should know and agree upon their team of financial professionals. This includes their accountant, financial advisor (if they have one yet), insurance agent, and attorney. Both spouses should trust these professionals and approve of their level of competency and customer service. For example, in the industry of wealth management, it’s a well-known fact that once a husband passes away, his widow will usually find another financial advisor. Why? Because chances are the wife was never involved in the financial and investment planning, and once she meets the advisor, she may have a different preference in terms of who she trusts when it comes to managing her money.

Early Midlife: Putting Things on Paper

Akiva and Temima are in their early forties and own their own home. They have one married child, and four singles. Akiva is an IT consultant and Temima works as an occupational therapist. They both have nice pensions waiting for them in retirement. With more chasunahs in the near future, including another seminary tuition, they know that they’ll probably need the chunk of change in their savings account as well as some of the money in their investment account.

The thirties and forties is usually the time that couples begin to acquire sizeable assets such as homes and growing bank accounts. It’s also when couples should consider estate planning. Simply put, “estate planning” refers to making a plan for your assets in the event that you become incapacitated or die, while taking into consideration many things such as income, gift, and estate taxes.

Typically, the fundamental part of any estate plan is a will. Many people think they don’t need a will or they put it far down their “to-do list” because they assume that, if something happens to them, their spouse will get all their assets. But, says Keren Birnbaum, assets may not pass to who we think they will. In some states, spouses do automatically get the assets, in others, assets are split between the surviving spouse and the children.

Keren recalls a situation she was involved with that didn’t end well. A husband and wife were in their mid-thirties and lived in New York. He was a successful accountant with significant assets in his name. With Keren’s help, the couple created a solid estate plan that directed where their assets would go if one or both passed away, enabling the remaining spouse to support the family very comfortably. Unfortunately, the couple got caught up in the busyness of life and work, and never had the time to sign the estate plan documents. Unfortunately, one day the husband was out jogging and had a heart attack, leaving his wife a widow.

With no will signed, New York State law required the first $50,000 to go to his wife, and the balance split fifty-fifty between his wife and kids. Since the kids were legally too young to have the money go directly to them, the court appointed a “guardian-ad-litem” to represent them. This individual is in charge of the children’s assets until they turn 18. When the kids turn 18, they get control of the money, with no strings attached.

Creating an estate plan is also very relevant to those who own their own businesses. If they pass away young, what is the plan for the business and who will take it over? Does this person have the ability and know-how to keep the business successful, let alone running? How will the surviving spouse be provided for financially? For example, Meir owns a successful consulting business and has a rolodex of clients. If Meir passes away, is the intention for his wife, Rikki, to take over? Will she hire someone to manage the current clients? Is there a plan in place for Rikki to be able to sell the business?

Let’s assume that Meir has a business partner, Reuven. If one of them suddenly passes away, is there a written agreement in place that ensures the widow is still financially supported by the business? Will she get a pay-out from the business? These are all scenarios and questions that, with the help of an attorney, can be addressed prior to a terrible situation taking place.

It’s important for both early midlife spouses to continue being knowledgeable about the family finances, especially as more assets are acquired and the financial plan gets more complex. For example, being that they have more money, they may choose to invest it. If this is the case, they should both understand how their money is invested, and why it’s invested in this way. Is it invested with a high tolerance for risk or low tolerance? When does the financial plan anticipate retirement and what happens to the investments as they near retirement? Is it providing for current income, growth, wealth preservation, or a mix of these? Does it take into consideration big expenses like chasunahs? When both spouses understand the plan, if something happens to one of them, the other should be able to decide if and how the plan should change.

Let’s say Akiva and Temima have unfortunately seen better days in their marriage. They want shalom to prevail and are doing everything possible to keep their family intact, but what should Temima do if it looks like their marriage may be unsalvageable?

Alexandra Schonfeld Weaderhorn, a divorce, family, and matrimonial law attorney from Schonfeld & Goldring in Cedarhurst, NY, reiterates the importance of “knowledge is power.” One of the most important things that she encourages women (and men) to do when facing divorce is to start keeping a financial diary — everything from what banks are used, where their money is invested, expenses, who they lent money to, what debts they have, etc. The goal is to not only make sure the assets are eventually split fairly, but to also have a clear picture of how much money you and your family need to live.

The financial diary can also prove vital to a spouse whose husband/wife works “off the books” and their full income isn’t reported on a tax return. For example, the husband may claim he made $50,000 but, after writing everything down in a financial diary, the wife soon realizes that the bar mitzvah alone cost $30,000, the monthly mortgage is $5,000, they traveled a few times last year, stayed at a luxury hotel and flew business class each time. All this information is pertinent in understanding how much the mother will need to continue raising her children according to their current lifestyle.

The Golden Years: Tying Up Loose Ends

The sixties and seventies is a time that couples may start to contemplate retirement, such as where they want to live and how they want to live their life in their remaining decades. Assuming they’ve followed all the above suggestions, there are a few more things they should be doing at this stage.

Let’s take Yisroel and Miriam. They’re in their early sixties, finished marrying off their children, and are starting to talk about where they want to spend retirement. Yisroel spent 40 years as the owner of a wholesale distribution company, with nice savings and a pension to account for it, and Miriam enjoyed her time as a stay-at-home mother. They’re well aware of the statistics and know there’s a possibility that Miriam will outlive Yisroel. How can they prepare for Miriam possibly spending her golden years alone?

The first thing Yisroel and Miriam should do is make sure their wills are updated and reflect changes in family members, assets, locations, and even tax laws. Next, they should make sure that accounts that have beneficiaries (such as life insurance policies and retirement accounts) are updated. For example, if Miriam pre-deceases Yisroel, they’ll need to make sure there are contingencies in place such as contingent beneficiaries on an insurance policy, retirement account, or will. In addition, there should be a successor agent on a health-care proxy and power of attorney.

Yisroel and Miriam know that all their kids have big families of their own, and they don’t want to end up being a burden on them in old age. The topic of medicaid planning and funding healthcare expenses during retirement can be discussed with their estate planning attorney.

If they decide that medicaid planning is right for them, according to Keren Birnbaum, it’s better that they start the planning in their early sixties. Keren further adds that there are different strategies that can be used to achieve their goals, and when it comes to medicaid planning, starting sooner rather than later also means starting the look-back period earlier (there’s a five-year look-back for nursing care, and two-and-a-half years for community medicaid).

Other topics that should be discussed with an attorney, financial planner, or accountant include estate tax strategies. As you consider which assets you want to pass to specific people, you should also consider the tax ramifications. Many wealthy families haven’t done this level of planning, and upon death, the tax hit may be unnecessarily high.

For example, the Greenbergs amassed wealth over time due to real estate purchases and other successful business ventures. Being that they weren’t raised with this degree of wealth, they’re unaware of how their estate will be taxed upon their deaths, and don’t understand that a lot of their hard-earned wealth will end up going to the government since proper tax planning was never done. Keren Birnbaum cautions that having this conversation now could be critical for some families, especially due to the possibility that tax rates may change under the upcoming administration.

While no one wants to think about being single, let alone prepare for it, the current pandemic has reminded us that unfortunate and unexpected events can occur, and no one is immune. We should all make the necessary arrangements so that if we find ourselves single at any stage in life, we’ll be in the best position possible.

When There’s Not Much Money

Let’s say you and your spouse are members of the lifelong renters club, don’t have bank accounts bursting at the seams, and there’s no prospect of money falling into your lap at any stage of the game. What can you do to still be prepared in the event that you find yourself single?

While some steps outlined here may only be relevant to those with sizeable assets, you shouldn’t ignore the main themes. For example, regardless of how much money you have, both husband and wife should be knowledgeable about the finances and should tackle them as a team. You should also consider consulting an attorney regarding the need for basic legal documents, such as a power of attorney and health-care proxy.

Lastly, consider life insurance. Certain communities and organizations offer traditional life insurance alternatives in the event that regular life insurance premiums are too costly for your budget.

(Originally featured in Family First, Issue 722)