Author Topic: Long-time friend shared serious worries if he dies before his wife. Solutions?  (Read 2290 times)

prudent_one

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Bob and I have been close for 30 years. We don't really discuss finances (probably because I don't like to talk money with friends) but I know they are not hurting. Last night I was at Bob's for a visit and he really poured out his heart and details.

Turns out Bob is retiring at 65. They have almost $2m (401k, IRA, brokerage, cash). He'll have $32K/year when he claims SS. He's always handled their finances and did well. The catch? His wife, one of the nicest people I've ever known, is not good with finances or numbers. I was shocked as I had never picked up on this over the years, but he says her dyslexia makes her terrible with numbers and she just doesn't understand personal finance beyond what you might get tested on in high school. He's tried to educate her, he's taken her to day-long continuing education classes geared to seniors that come with a textbook. He has concluded that she cannot manage their finances unless they are super-simplified in the event he dies first.  About a year ago she took over paying the bills via online bill pay, and she can do that OK (with the exception of paying a couple of them twice and ending up with large credit balances on a credit card for one billing cycle). She has a spreadsheet to track their bills but he had to build the formulas - her dyslexia made it impossible for her to do it accurately.

He has accounts at multiple brokerages, 3 bank accounts, multiple credit cards (to maximize rewards).

His wife is not a spendypants on herself so he's not worried that she'll blow through their savings if he dies first. He worries that if someone says "It's going to cost $20,000 to replace your furnace" she'll not realize that makes no sense (and he points out she might look at a quote and think it said $2,000). She's an incredibly nice, compassionate, helpful, non-confrontational person and tends to assume everyone is fair and honest. Especially non-confrontational with anything to do with money since she's self-aware enough to realize she just might not understand what's going on even if she thinks something smells. Man, I felt bad for him since I could tell how much it pained him to have to paint his wife in any sort of negative light.

So with that background in mind, what suggestions might you all have? Simplify everything right now to one brokerage, one bank and one credit card? What kinds of support could he try to have in place for her? They do not have children but she has a lot of friends although none of them are really the type to provide financial guidance in his opinion. Nice family but again, no real financially-savvy people there he said. He worries that while she could go months without any problems (just paying the routine bills, buying food and filling the tank won't cause issues), every once in a while there will be those situations outside the typical and that's where the risk will be. Unscrupulous repairpeople, really any situation where most people typically have a gut feeling of "those numbers don't seem right." A financial advisor probably isn't equipped to handle "Is $20,000 for a furnace a good price?" questions.  He wouldn't rule out an advisor even knowing there's a large price to pay for that, but thinks he has to get it in place ahead of her need rather than hoping she finds a good one. Since she isn't a spendypants is it enough to hope that if she gets taken advantage of, it will be on a small enough scale that there wouldn't be severe consequences?

I said I'd I wanted to crowdsource ideas before I got back to him.

elaine amj

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Simplifying accounts woukd help. When I started paying sttention to our finances, I discovered DH had a dizzying array of investments in a variety of locations. For 10+years after, my squirrel would uncover yet another pile of nuts lol to add to our spreadsheet.

I simplified everything, consolidating all investments into 3 institutions in a handful of funds. We still have a bunch of accounts across 4 institutions but the 3 have the bulk of the money.

Of course, now that DH has started playing with our money again, we own a bunch more funds, stocks and even cyrpto. As long as he still agrees to my managing the vast bulk of our money, I am doing my best to turn a blind eye. I do reserve the right to grumbke occasionally llol.


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lhamo

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Simplifying accounts is a good place to start.

Try to find a financial planner who is a fiduciary, and discuss with them different options for setting her up for a simplified regular income stream -- annuities get a bad rap but in a case like this it might be something to put into a will or trust (life insurance proceeds or funds from XYZ account get invested in an annuity upon his passing).  With a steady income from his SS survivor benefit and an annuitized income stream she would probably have more than enough to live on.   

Morning Glory

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Do you think that was his way of asking you to look after her if something happens? If he's specifically worried about repair people, maybe he could leave her instructions to get three estimates and run them by you before choosing one.

I would worry about scams as she gets older too, if she's really that trusting.

Abe

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He should discuss a trust with an estate lawyer. They can provide advice on a trustee to monitor the account and disburse funds for large expenses or however they want it organized. There will be a fee associated with this service, thus he’ll have to determine the risk of her being defrauded vs annual expense for management. However if her dyslexia is that severe it may be worth doing. My parents have a similar arrangement for my sister if she were to survive all of us.

Paul der Krake

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Annuity, guardianship (can be anyone they trust, doesn't have to be family), or a combination of both.

seemsright

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He should discuss a trust with an estate lawyer. They can provide advice on a trustee to monitor the account and disburse funds for large expenses or however they want it organized. There will be a fee associated with this service, thus he’ll have to determine the risk of her being defrauded vs annual expense for management. However if her dyslexia is that severe it may be worth doing. My parents have a similar arrangement for my sister if she were to survive all of us.

I would start here. A good estate lawyer would be worth the cost. I bet they would have a solution of some type. There are different types of trusts they could do with all kinds of hoops the money would jump through with all the wife would have to do is a phone call. They could set it up pretty simple for the wife to understand.

ChpBstrd

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Perhaps where the numbers and spreadsheets are missing the mark, some qualitative storytelling would click and be memorable. This would particularly work around fraud and scams. I don't have any specific resources, but I'm sure there are videos, articles, or local news stories about how the scams work. E.g. "The car warranty people typically cold call you and say your car warranty has expired... only later do victims find out the warranty they bought is worthless and the supposed company is non-responsive"... is a lot more memorable than "watch for phone scams". It's also a more generalizable lesson that could help her discern the illegitimacy of internet or door-to-door offers for intangible goods. 

E.g. https://www.aarp.org/money/scams-fraud/info-2021/woman-lost-45k-sweepstakes.html

There are also certain processes that could be put in place that the spouse could continue following many years after Bob's death. For example, always get 3 quotes for services over $X, stick with an asset allocation of Y, follow this written plan when it's time to buy a car, only use fee-only financial advisors, say no thanks every time the internet company calls to ask if you want to upgrade, use this tax accountant, talk to this attorney before making any big moves, etc.

In addition to bill automation, Bob could set up automatic transfers from their brokerage to their checking account. Some brokers might forward dividends and interest, for example. In this way the wife could be on a sort of payroll and not have to sell things or make transfers manually. Such a system could work maintenance-free for years.

Bob could also keep a list of accounts and passwords hidden somewhere in the house, such as in a safe the wife could get into. This mitigates the risk she forgets she has an account with a broker, bank, or vendor, or cannot get into their system to manage business. These issues are particularly acute when it's time to buy a new computer and all the saved passwords die with the old one.

Also, it's probably not as bad as it sounds. Oftentimes widows become free from the behavioral patterns, gender roles, and enablers that once limited their capabilities. After Bob's death, his wife might bootstrap herself together just fine to do the tasks she used to let him do for whatever reason (e.g. maybe because he was picky or critical about it).  With no one to defer to, she'll probably get by just fine.

secondcor521

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The only real answer I know is for someone who cares about Bob's wife to watch over her either actively or behind the scenes.  Often this is family or a close friend (I agree with the other poster that Bob may have been feeling you out for this role).

I'm helping my Dad in this regard now.  I log into most of his accounts monthly and check for any odd behavior which may indicate fraud, abuse, or the like.  I also then do any legwork to fix any problems.  I keep my Dad and my sisters informed of what's happening.

One thing to think about is that whomever is in that role has to balance protecting them from harm with letting them do their own thing as an adult and not getting too much in their business.

Bob might ask his wife who she would trust in this role after he's gone.  Most businesses have mechanisms to send copies of bills to a trusted person, or the ability to log in and check, and similar roles.  Overall, Bob's wife can grant a POA which would allow someone to transact on her behalf, which might be helpful in regards to areas where she might have limited knowledge.  In theory, she could grant a limited POA to someone to manage things related to the house, for example.

If she's truly incapable, then someone can get a conservatorship.  I've heard this is expensive and difficult to do, so a durable power of attorney may be better if it's put in place before she loses capability to handle her own affairs.

former player

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I would tell him he needs to have a will with trusted and expert executors.  He then includes in the will an instruction to them to buy an annuity for his wife for an income that will keep her comfortably for life.  She might still get scammed but as long as she doesn't borrow to pay the scammers it won't affect her quality of life.

If there is anything left over it can go into a discretionary trust that will pay out to the wife at the discretion of the trustees.

I'm assuming either no kids or kids that can't be trusted here, so the fact that they won't inherit the annuity money becomes irrelevant.

One issue that hasn't been raised yet is the possibility of the widow re-marrying.  She is at risk of marrying someone who cares more about her money than her.  There is not much to be done about that, though, as long as she is legally competent to marry (which she must be).

20957

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This is counter-intuitive, but can she start doing some of these things now? Quotes and the like, the once-in-a-while stuff. It takes some practice IMO especially for women to become comfortable pushing back and asking questions of men who seem like they know more, even when they are working for you. So if she can be the go-to person for the next home or car repair, without agreeing to anything right away, running it by her husband afterwards for advice and encouragement, she can learn to ask questions until she understands the problem and proposed solution, can learn to say "thanks I'll call you back when I've decided, can I have the quote in writing", can brainstorm other people she might call for advice if her husband isn't there. Learning your own limits more precisely and becoming more confident within them and more comfortable asking for help outside them is a really great skill.

TrMama

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In addition to all the great advice above I'd suggest they move into a simpler home/apartment sooner rather than later. Then there won't be a furnace/roof/etc for her to be responsible for.

Bob's wife sounds quite a lot like my MIL. Lovely woman, but absolutely awful with money or anything requiring she say no to someone. Our solution was to have her move into our MIL suite. That solved all housing-related issues since DH and I dealt with the house and MIL just lived here. If Bob passes first, she may want to seriously consider moving to assisted living or some kind of senior's complex. She'll just have to pay rent and if something breaks, she calls the maintenance guy. Of course, it'll still be possible for someone to take advantage of her but hopefully the sums will be smaller.

As an aside, dyslexia has nothing to do with math abilities. Dyslexia is a reading deficit. Dyscalculia and other cognitive deficits can cause issues with math comprehension, but dyslexia on it's own has nothing to do with it. In my MIL's case, I strongly suspect she had fetal alcohol syndrome that made it extremely difficult for her to even add and subtract.

Dee18

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When my father was diagnosed with terminal cancer he went ahead and hired an investment manager so my mother (then 84) would not have to worry about anything.  That is one reasonable approach and worked out well for her.  I do not want to give up a % of money every year to a manager (and I want to manage my money for now) so I found a fee only financial planner.  I have met with him twice so far and have introduced  my young adult daughter to him.  I prefer this situation and in the unlikely event that I have a sudden death my daughter knows who to turn to for financial advice. Either of these paths would probably help relieve your friend's concerns.
« Last Edit: June 16, 2021, 05:29:37 AM by Dee18 »

elaine amj

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Also, I should add that I hope he has talked to his wife about some of his concerns. My DH has been battling cancer for some years and prognosis has not always been good. Anyway, one of his top concerns was to tidy up his affairs. Some time into all this, he brought up that he really didn't think I would be capable of handling things if anything happened to him. Stuff like paying the bills, etc. I was not very impressed with his view. Sure I won't be able to do it as well as he does (he's super organized, notices everything, and always remembers garbage day). But if I have to, I'll find a way to deal with it all - other than missing garbage day a few times lol.

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Green_Tea

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Money matters in my experience scare some people while in reality they are actually quite simple and those people would be perfectly capable - if they only dared to try to understand/do them!

This is counter-intuitive, but can she start doing some of these things now? Quotes and the like, the once-in-a-while stuff.

Second this. Money matters are just something that is learned.

Also second what @ChpBstrd said that she'll possibly be able to cope a lot better than anticipated (even and especially than she might believe herself) if she has to.

If there's a problem with grasping the meaning of numbers, this is something that can probably be learned. You/DH can give her some guidelines like: always ignore the numbers after the comma (unless buying hundreds of a thing) and then play a kind of game to let her guess and find out how much things cost so she can develop a feeling. Like: would she think this or that is in single or double digit range, in the hundreds or thousands etc.
Start sharing everything with her concerning money matters (in her pace).

I hope the best for your friends, they seem to be very nice people and she seems to be in a bad place concerning money matters, feeling that she's able to take care of financial matters could be very empowering.
« Last Edit: June 16, 2021, 06:13:36 AM by Green_Tea »

MrThatsDifferent

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I feel for your friend and his love for her leaps of the screen, that’s beautiful. When my grandfather died my grandmother found herself in a similar situation as she had never touched the money or bills, although she was the working spouse. I didn’t know what I was really doing back then, wish I knew what I know now, but I did my best to set things up for her by simplifying what we could, pooling her money together and giving her a plan. She’s been incredible and is diligent about everything and she’s so proud of herself for keeping everything going these last 15 years. The biggest thing to look out for are scammers who target elderly people. Anyways, here’s what I would do now:

1. Get a will ASAP, or update the existing will
2. Have an estate plan
3. Simplify all accounts
4. Have a plan for the credit cards (if I die, cancel all cards except X)
5. Run the systems now, let the wife take over all money matters now while the DH operates in the background mentoring and guiding—treat it like a dry run and adjust the system based on her needs while DH is still around
6. Have something set up so that she can get second opinions on any large purchases so she doesn’t get scammed, whether that’s friends or whatever
7. Take care of yourself, eat well exercise and focus spending as much time loving each other as possible

Steeze

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One brokerage, one mutual fund, one checking, one savings, one credit card with a limit that won’t get her into trouble.

Set up auto transfer of dividends to savings. Set up auto selling of shares of x-dollars per month with auto transfer to savings. Set up auto transfer from savings to checking, her “paycheck”. Set up auto pay on all the bills from checking.

Make all the major repairs- replace car, roof, boiler etc. - ensure transfers above account for future major expenses like car replacement so over time cash builds up in savings for them. That way she never has to sell shares in theory. One fund approach so there is no decision making if she does.

An annuity could make sense in this case if there is true excess built in and no heirs. A trust could also be useful to distribute funds on a schedule or provide qualifications for additional distributions such as healthcare expenses.

All this makes me realize I don’t know a single person in real life that has the person finance experience to manage my finances for my family if I passed away suddenly. Would be a nightmare for my wife to try to navigate. She doesn’t even know, or want to know, all the accounts or passwords. Not smart. Who do I know that doesn’t suck with money....

Zamboni

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Dude, if anything happens to Bob, obviously he wants you to help her. Sounds like he trusts you.

Anyone can start having problems managing those things as they age. For example, my Dad's elderly friend was paying bills for which he had credits rather than an amount owed, so the amount in credit kept doubling monthly. No one knew until he complained to his buddies that his monthly electric bill was something crazy like $2000 (because he had built a $2000 credit by doubling his credit monthly for a few months . . . whoops!) That was when an offer to review all of his bills and his checkbook was made. Let's just say there were other issues involving charity donations that he couldn't even remember making because he thought the slip the charity sent in the mail was a bill.

So, what I'm getting at here is that Bob ALSO needs to think about who can help him with these things as they age or even if he outlives her. Sure, he might be sharp as a tack right up until the moment he keels. Or he might not be so sharp anymore and not realize it. Perhaps you could agree to look after each other? Or find a third party solution together?

stoaX

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Great thread, posting to follow.  When you take a few minutes to think about it, the personal finance involved in running a household is a part time job.  I gotta spend some time simplifying things myself.

shelivesthedream

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Does his wife acknowledge her problems with numbers/finance and think help will be a good idea? If so, I think the answer is pretty simple. Together, they find a friend or family member who will check over her accounts every month and be on hand to answer "Is £20k reasonable for this £2k job?" questions. His will could pay them a stipend if this seems necessary/appropriate, and he can write a summary of their situation to be given to the person on his death, updated annually.

If not, there's only so much he can do. But setting up an annuity-type trust to dole out income may be better than giving her access to capital - so she can only "oops" away that month's money at a time.

Steeze

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Great thread, posting to follow.  When you take a few minutes to think about it, the personal finance involved in running a household is a part time job.  I gotta spend some time simplifying things myself.

Yeah - I have some unnecessary complexity in my structure, mostly because it has entertainment value for me so simplification isn't needed. Thinking about all this through this lens makes me think perhaps I should rethink my strategy a bit. Maybe hold only a target date fund in all the accounts, that way my wife needs to do nothing, make no decisions. Not really my style, but perhaps I should be thinking about it differently. Perhaps I would incur some capital gains by switching in taxable though, so its not so straight forward, but in all the tax advantage accounts it would be easy enough.

Interesting topic.