How physicians can prepare their spouses to manage family finances after their death

While grieving the death of a spouse, the surviving partner understandably tends to pay little attention to practical everyday matters.

Yet even in bereavement, life must go on, and letting some things go can only increase stress that’s already elevated.

Some of the more consequential areas of this inattention are financial matters. These impacts can be particularly difficult for spouses of physicians who haven’t been involved in the couple’s financial management and planning. Such spouses have a pressing need for guidance to avoid financial chaos and cash shortfalls when their partners die.

Bills keep arriving

The issuance of death certificates and checks for insurance proceeds can be a slow process, taking weeks or even months. But bills keep arriving promptly.

In an ideal world, all couples would share financial management and planning responsibilities, working as a team. But most often, one partner takes the lead.

In many such cases, the less-involved partner is unaware of their spouse’s total compensation picture. For physicians, this picture can be varied and complex, and identifying pending income is far more difficult for medical spouses than for spouses of professionals whose income is largely or wholly in the form of straight salary. It’s hard enough for many busy physicians to keep track of pending compensation themselves, let alone for surviving spouses uninvolved in the day-to-day finances.

Ideally, physicians who have long handled the family finances exclusively have already familiarized their spouses with their compensation and the couple’s overall financial picture. But because the devil is always in the details, the surviving spouse needs a written guide to follow.

At a bare minimum, this guide should include a basic summary of what assets and accounts are held and where they’re kept, as well as a list of all sources of income. The guide should also include the names of people the spouse can call for guidance and instructions on how to access funds.

A candid conversation

When the guide is presented, there needs to be a conversation. This can be quite difficult for many people, as death and related matters are a subject they’d naturally rather avoid. Though this conversation can be uncomfortable, it gives the spouse an opportunity to ask questions. Explain where the guide and legal documents are kept and how to access them. If these are stored digitally, make sure your spouse understands the secure access process.

To prevent the spouse from being financially overwhelmed while trying to manage grief, physicians should leave a list of steps to take immediately after their death.

In the conversation, walk the spouse through the first steps, including whom to call and how to cover immediate expenses. When supplemented by this conversation, the guide will serve not only as a critical resource but also as a source of emotional reassurance.

It’s a good idea to revisit the conversation periodically and update the guide as accounts, compensation arrangements or family circumstances change. Tailor the level of detail to your spouse’s financial knowledge so the information is clear and easy to follow.

What a surviving spouse’s financial guide should include

Comprehensive financial guides for spouses who are less involved in managing the couple’s finances should include:

• A list of key phone numbers, including those of financial advisors, accountants, attorneys, estate planners, business partners and business planners, as well as any personal bankers, so the partner can immediately learn the status of various liquid accounts and determine what cash is available for withdrawal to pay current expenses.
• A list of all forms of compensation, both regular and intermittent, and their specific sources and methods of payment (checks or direct deposit arrangements), numbers of these destination accounts, and phone numbers and web addresses of these institutions. (To ensure ready access to cash, physicians who lack joint checking accounts should consider talking with their banks to explore options for their spouse.)
• An inventory of liquid assets, their approximate value and information on custodians, with an explanation of how these assets might have figured into the couple’s day-to-day financial affairs. This inventory should include all negotiable assets, including cryptocurrencies (with wallet location information and passwords). Though this list should be comprehensive, it should be tailored to the spouse’s level of financial knowledge.
• An inventory of illiquid assets, including any real estate holdings, rental properties and private investment arrangements, as well as names and phone numbers of any property managers for or partners in these holdings.
• Copies of partnership agreements or contracts for medical practices or any personal business ventures, including documents stating compensation arrangements — payout percentages and intervals as set down in partnership agreements and accompanying documents concerning salaries, bonuses and profit-sharing arrangements — and phone numbers of partners and the practice’s business manager.
• Information on any employee benefit accounts — 401(k), 403(b), etc. — including account numbers, contact information and a summary of the physician’s withdrawal plans, pertinent tax status, etc.
• Details concerning the management of any secondary residences or vacation homes, including the location of deeds or leases, and phone numbers and email addresses of property managers, caretakers, landscaping services and regular vendors who look after or supply the properties in the couple’s absence.
• A detailed picture of the month-to-month family finances and cash flow, with an itemization of the monthly bills and their approximate recent amounts so the spouse can spot any likely overcharges, and a list of the accounts (with account numbers) from which these bills are usually paid.
• A list of debts, lines of credit and the institutions involved — both personal and for any partnerships or practices — with account numbers, payment intervals and approximate regular amounts.

Of course, much of this is less pressing if the spouse is closely involved as a partner in managing the couple’s finances. In such cases, it’s not unusual for couples to attend meetings with advisors together, enabling a relationship between the survivor and the advisor that can be extremely helpful after the physician dies.

Even if the surviving spouse eventually chooses to work with another advisor, having an existing relationship with an advisor can make a big difference during the difficult initial period after the physician’s death.

Michelle Reddick is an advisor in the Indianapolis office of Allworth Financial LP, a national investment advisory firm registered with the Securities and Exchange Commission.