(Word count = 541 words plus 61 words for About the Author)

Everyone's situation is different following a husband's death, but often the lessons from one woman's experiences can help another.   One of my clients, Mrs. S., lost her husband to cancer at age 61.   Her emotional heartache and sadness was aggravated further by her anxiety about finances including fear, helplessness and to some extent ignorance because her husband was a take-charge breadwinner and had handled everything. Luckily, she trusted me to expand my role from being their CPA to being her key financial advisor and I helped educate her as we set out to make plans for her new life following her husband's death.   Over time working closely together and by being conservative and careful, her financial affairs turned out well and she developed her knowledge and self-confidence.

Mrs. M. had an entirely different situation when her husband died at age 83 from a heart attack two years ago.   Her and her husband were older than Mr. and Mrs. S. and had accumulated a much larger nest egg, primarily as the result of a successful retail business they ran together.   Mr. M. handled the buying, selling and operations and Mrs. M handled all the company's financial affairs.   And because she was so good at the business's finances, she also handled many, if not most, of their personal financial matters.   Thus when he died, Mrs. M. felt it very appropriate for her to handle the final financial affairs and to make what she thought were logical changes.   Also, throwing herself into the transactions allowed her to preoccupy herself and try not to face minute-by-minute the extreme loss of her cherished husband, with whom she spent most waking hours.

A few months after Mr. M's death, I was called by her oldest son to help evaluate whether any changes should be made and also to handle any new financial planning issues such as a living trust for Mrs. M.   When I prepared a financial snapshot of assets and liabilities and a snapshot of income and expenses, it became apparent that her assets and income were sufficient but it was then that I detected certain problems.   For one, in her eagerness to settle matters, she had cashed in several deferred annuities, subjecting her to significant income taxes, whereas she could have avoided that by electing a spousal continuance of the contracts.   Also, her actions put her husband's estate in the position of not fully utilizing his lifetime estate exclusion, which in turn caused her own estate to be at risk of possibly incurring very significant estate taxes upon her death.   This knowledge is known by experienced financial and tax specialists and not by business owners like Mrs. M.   The lesson I learned from this situation was that a surviving spouse should always seek professional help before taking actions.   For bright experienced women like Mrs. M. a suggested path would be for her to do all the research and identify the actions to take, but then consult with an advisor before implementation.   Fortunately, when I got involved we were able to "undo" some of the changes she made and preserve a good deal of Mr. M's exclusion and minimize the potential estate taxes upon her death.

In future columns, I'll recount other experiences of clients whose spouses passed away, and the related lessons.

About the author:

Frank Sisco is a CPA and Personal Financial Specialist and writes on topics related to life and money.   You can contact Frank by email at ideasmoney@aol.com or by phone at 914.740.4422 in order to express your opinion about this article or to obtain copies of prior articles.   He resides in New Rochelle, NY with his wife and daughter.