Ask an Adviser – Navigating financial challenges after losing a partner 

October 1st 2024 | Categories: Ask An Adviser |

When someone loses their life partner not only are they dealing with the overwhelming grief that comes with such a loss but often they’re having to face financial challenges as well. In some circumstances, when the person who has died looks after all of the household finances, the one left behind has to learn everything from scratch – be it mortgage repayments, day-to-day expenditure, insurance cover, assets, debt, superannuation and more. It can be extremely difficult to take that on in addition to the emotional trauma they’re facing.  

Canberra-based financial adviser Deepti Palmer guides a client through such circumstances and shares her thoughts with us.  

Q. I understand the focus of this particular ‘Ask an Adviser’ stems from a scenario whereby your client was widowed and felt completely out of her depth financially as her husband had always looked after the couple’s finances.  

Yes, that’s right. A lovely woman (let’s call her Sarah) in her early 70s was referred to me by an existing client. Her husband of over fifty years passed away late last year and we met for the first time in March. She was completely distraught and so emotionally raw. Ultimately, she wanted someone to show her the right direction and to build her confidence as she felt very vulnerable and didn’t know where to start. Furthermore, Sarah was uncomfortable going to her (adult) children for advice, not wanting to burden them.  

Sarah is an extremely intelligent person but so much of what she was learning was new and so, it was a lot of absorb. As it is her first experience with a financial planner we continue to take things slowly.  

Q. Often in households one person tends to be more across financial matters than the other. What are the downsides of this? 

In the case of my client, she didn’t know if the available cashflow (from her assets) was enough to live on or to sustain her quality of life. The anxiety was heightened since she had also lost Centrelink age pension benefits, as is often the case when a couple assessment suddenly all falls on the remaining spouse. Sarah had never been across the day-to-day cashflow management of their household since her husband had taken care of everything and her concerns about a regular income were completely valid. Fortunately, she is in a strong financial position.  

Q. Should people in a partnership have separate bank accounts?  

There’s not really a right or wrong answer here as it’s so relationship and/or person specific but regardless of whether people in partnerships have shared or separate accounts, I strongly believe that basic financial education is necessary for every individual once they start working. Everyone should understand their financial standing.  

Q. What advice would you give to those in long-term partnerships who are unaware of their financial position and have low financial literacy?  

In my experience, it’s not uncommon for people to be in the same situation as Sarah whereby one person looks after all of the finances and does all of the associated administration (manages bank accounts, superannuation, insurances, investments etc). However, as we’re well aware, life doesn’t always go to plan. No-one wants to leave their loved ones in the dark or with financial troubles after they’ve passed. It only makes an already devastating situation tougher.  

With all of that in mind, I think it’s important to have the ‘money conversation’ with your partner and for there to be a clear written record of everything in place. I believe the responsibility is on both people in a partnership to be aware of their finances. Knowing your assets and liabilities is crucial, not to mention where all the important original documents are stored (house title, wills, insurance policies, marriage certificate and so on). 

I understand that it may seem an uninteresting or morbid discussion to have but regardless of your age and stage in life it’s a very important one.  

• Create a Shared Document with Key Information 

This is a really practical step. This document should include all of the information that could impact your partner’s financial future. It’s necessary to ensure that you’re never caught off guard.  

For example, note down key information such as bank account logins and passwords (joint bank accounts can be accessed by the surviving partner), details on shares, investments, assets, any debts / liabilities, insurance policies etc.  

When delving into the topic of your superannuation fund, look into whether your policy includes Total and Permanent Disablement and/or life insurance. It is advisable for those with a large amount of debt to have life insurance. Should something happen to the person carrying the debt, death cover gets paid to the surviving spouse in a tax-free lump sum which would certainly alleviate some financial pressure. In addition to the emotional trauma they’re dealing with, an insurance payout may mean being able to stay in the family home (i.e. not having to sell because mortgage repayments cannot be met) or not having to find another job just to meet day-to-day expenses.  

The all-important shared document should also include contact details for your accountant and solicitor. This is also the time to discuss Powers of Attorney and Wills.  

As financial advisers we take a holistic approach, covering anything and everything. In early meetings with our clients we recommend establishing a Power of Attorney and writing a Will as a must. No matter how young someone is, we strongly encourage clients to prioritise this – after all, no-one knows what the future holds. And if something unexpectedly happens, we don’t want to be a burden to our loved ones.  

Q. Any closing thoughts?  

Being across shared finances when someone loses their life partner certainly makes things more manageable, since there is such a lot of change and administration required. It also helps advisers better support the person left behind with estate planning, insurances, Centrelink planning, not to mention managing debts and ongoing cashflow/asset management.  

I’d also add, don’t be daunted by the ‘what if’ conversation – perhaps see it as simply prioritising your partner and your family. Discussions about death may seem scary and overwhelming but it’s also important to remind yourself that adding financial woes to the grief and pain of losing a partner only makes things harder for those left behind.  

Thank you so much for your time, Deepti. 

Deepti Palmer
Financial Adviser

Connect with Deepti on Linked In.

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