Taking positive steps to move forward after the loss of a spouse
Client Challenge: Experiencing the loss of a spouse, and the need to make decisions and address financial well-being while still recovering from that loss.
The KHC Approach
1. Clarify Goals
2. Build a Plan
3. Take Action
Losing a spouse is one of life's most devastating events.
For Jane, after many years of marriage, sudden widowhood left her feeling bereft and overwhelmed. In addition to the grief of losing her husband, Ben, she soon faced several major decisions and financial complexities, most of which were new to her -- Medicare selections, income and cash flow needs, long-term care plans and other areas that Ben had managed for most of their married life.
After his passing, Jane was at a loss with all she needed to do, especially given that she was not at her best either mentally or emotionally. On top of that, she had depended on Ben for many of the couple's financial decisions, and was hesitant to trust anyone else.
Jane's daughter Kate, however, persuaded her to seek out professional assistance to help evaluate her situation. Together they called on the team at KHC Wealth Management to determine immediate priorities and decisions based on Jane's financial situation and goals.
For KHC principal and wealth manager Lucas Bucl, CFP®, the first priority was to understand Jane’s goals in order to make her relationship with KHC successful. That was simple for Jane: She wanted to be financially comfortable and have peace of mind. She wanted to preserve her assets as needed and hopefully experience some growth from them. And finally, she wanted to have a plan to leave a legacy for her daughter. During the team's initial meeting with Jane, Bucl laid out KHC's three-pronged strategic process to work toward meeting Jane's financial and lifestyle objectives:
- Clarify goals
- Build a plan
- Take action
Clarifying Goals: It was important for the team to understand Jane's background as they worked to crystallize and clarify her goals. Her upbringing as one of four children -- one of whom had suffered rheumatic fever as a child, leaving him with some cognitive impairment -- played a huge role in her desire for financial independence and other goals. Values like living within your means, aversion to debt and careful spending formed the foundation of her lifelong spending and financial habits. Armed with that background, the team and Jane determined some high-level objectives:
- Determine overall financial position and ability to maintain her lifestyle with current assets;
- Evaluate long-term care options;
- Provide support for Jane's handicapped brother, if necessary;
- Remodel and update her home with a goal of eventually selling it and downsizing in a few years;
- Travel to see family and take her daughter to Europe;
- Provide an inheritance or legacy for Kate.
Her financial and lifestyle goals clearly organized, Jane was now in a good position to begin reconciling those goals with her financial position in a fact-based and logical manner.
Building the Plan: Jane and the KHC team next took a deep dive into her financial position, understanding her monthly expenses and aligning them with her objectives. This included the improvements and remodels she planned in the short-term to ensure she optimized the value of her home when she sells in a few years. The team viewed her net worth report and began to compile for her a financial independence plan. Key to executing the plan will be detailed ongoing monitoring of Jane's expenses to ensure that everything is covered and her cash flow and expenses are optimally matched. The team gauged Jane's tolerance for investment risk as conservative, then began to consider some changes to her 401(k) plan to better reflect her position and comfort level. The team also began to explore investment vehicles to start building Kate's legacy portfolio and reviewing options for long-term care insurance for Jane.
Taking Action: Looking to the future, the KHC Wealth Management team implemented some 401 (k) changes that would enable Jane to both save money and realize some tax efficiencies. The team offered advice on carving off a legacy portfolio for Kate, and suggested some beneficiary changes. Additionally, based on Jane's goals and financial position, team members advised her to change up some of her property coverage policies to ensure they were adequate, and supported her in making healthcare insurance choices. With KHC's help, Jane is on track to meet her financial objectives. Most importantly, she now has a clear understanding of her overall financial situation which has given her comfort and peace of mind.
Disclaimer: The above does not repreent an actual client's experience but rather is meant to provide an example of the firm's process and methodology.