23rd June is International Widows’ Day, a reminder of the challenges many face after losing a partner. While it’s never easy to think about life after loss, planning ahead can help ensure financial security for those you love most. Protect your loved one by taking these five proactive estate planning steps.
The financial realities of losing a partner
Widows and their families frequently face hardships when a family breadwinner dies unexpectedly. Losing a partner is already an emotional ordeal, but financial difficulties can make it even more challenging. Unexpected financial strain can happen for many different reasons.
- Stephen could not access funds in his deceased wife’s bank account because the account was solely in her name. He had difficulty covering mortgage payments and school fees during the probate process, even though there was ample cash in her account.
- Clare and Jonny depended on their dual household income to pay their monthly expenses. When Jonny died suddenly, Clare could not cover all the bills and was forced to downsize the family home.
- Patricia struggled to cover the tax bill on assets inherited from her partner because all the wealth was tied up in property and investments rather than liquid assets.
Proactive estate planning could have avoided all these problems. Let’s take a look at some steps you can take to protect your partner if you were to pass away so they don’t have to face issues such as these.
Five essential estate planning steps to safeguard your partner’s future
- Establish a comprehensive life insurance policy
Life insurance serves as a financial safety net, ensuring that a surviving spouse is supported after the loss of their partner. It provides protection in a number of different ways:
- Covering funeral expenses and other immediate financial obligations following a death
- Replacing lost income to cover essentials like rent, mortgage, utilities and daily expenses
- Paying off debts such as outstanding mortgages and credit card bills
- Covering inheritance tax without needing to sell property or liquidate investments
- Paying school fees
Providing a financial cushion while the spouse adjusts to life changes - Avoiding legal and financial bottlenecks while assets are tied up in probate
Check out our article on how to work out how much life insurance you need, or speak to your financial adviser, who can help.
- Set up clear wills
Never assume that your spouse will automatically inherit your estate in the absence of a will. A well-drafted will is the only way to ensure that your assets are distributed according to your wishes. It allows you to designate specific inheritances, including property, savings, and investments. Without a will, legal complications can arise, leading to financial uncertainty or disputes among beneficiaries.
Of course, there’s no use having a will if no-one can find it. Make sure your spouse and the executor of your will know where your will is kept.
Be aware that some jurisdictions have forced heirship rules dictating, for example, that you cannot disinherit children. Seek professional advice to ensure you understand the rules in the countries where you hold assets and how to make estate planning provisions accordingly.
- Ensure access to joint financial accounts and emergency funds
It sounds obvious but make sure your partner knows where your financial accounts and emergency funds are held. It’s a good idea to keep bank account details, insurance policies, and other legal documents in a safe and easily accessible place to eliminate any unnecessary obstacles to accessing essential funds if you were to pass away.
If you share joint bank accounts, make sure they are set up correctly to allow your partner to continue accessing funds. Some banks automatically freeze accounts upon one holder’s death, so it’s worth checking the policies of your financial institution.
- Review and update pension and retirement benefits
Many financial accounts, including life insurance, pensions, savings, and investment funds, allow you to designate a beneficiary. By naming your partner, you ensure that these assets transfer directly to them without going through a lengthy probate process. Be sure to keep beneficiaries up to date at all times.
- Consider a trust
Trusts can be used to safeguard assets for your spouse and dependents. They are a useful tool to streamline inheritance, minimise tax liabilities, and ensure financial stability without the prolonged process of probate. However, trusts are a complicated area requiring professional, specialist knowledge.
You can find out more about trusts here and if you are interested in exploring whether a trust could be beneficial to you and your loved ones, feel free to get in touch with our knowledgeable team for advice.
Estate planning advice for expats in Asia
Estate planning isn’t just for the wealthy – it’s for anyone who wants to ensure their loved ones are taken care of without unnecessary legal or financial obstacles. Taking action now can save your spouse from significant stress and financial difficulty if they are widowed unexpectedly.
If you want to ensure peace of mind and stability for those you love after you’re gone, speak to one of our financial advisers about creating a comprehensive estate plan tailored to your specific circumstances.
A leading provider of expat financial services and wealth management services across Asia.
