Families are a complex system of support. No matter the generation, there is usually a division of labor between the principals. In the United States, the stereotypical model envisions a husband employed outside of the home while the wife manages the child care and/or household. Increasingly we are seeing a multitude of models, including the wife functioning as the primary earner or the spouses sharing the roles equally.
Whatever the division of labor, it is not unusual for these roles to change within a family overtime. Perhaps one spouse assumes more responsibility for child care when the other spouse returns to school. Or when one spouse loses his or her job, it is not unusual for the other spouse to become the primary earner. It is this flexibility present in most families that serves as a foundation of strength.
Unfortunately, this foundation of flexibility and support can be severely challenged when one spouse dies. Medical research tells us that when illness or death strikes one spouse, there is an increased likelihood that the other is going to face serious medical problems. Referred to as the “bereavement effect”, researchers have found that your health frequently becomes interdependent on the health of your spouse. In a 2006 study published in the New England Journal of Medicine, the authors concluded that an elderly surviving spouse had between a 17% and 21% of dying within the first year following the death of the first spouse.
Many individuals delay or ignore estate planning assuming it is unnecessary because all of their assets will be inherited by the surviving spouse. A number of planning tools—especially the use of joint tenancy—makes the assumption ostensibly reasonable. But what happens in the event when there is a systematic failure in the family? I have counseled numerous families where the spouse that handled the business affairs passes suddenly, and the surviving spouse is unable to assume all of the management. I have also assisted families where the surviving spouse doesn’t know all of the couple’s assets or how they are managed.
Good estate planning anticipates the bereavement effect by attempting to plan not just for death also but multiple contingencies. Good estate planning allows the surviving spouse to find the assets and assume responsibility for the management of them immediately. If the surviving spouse is not capable of the management role, good estate planning includes contingency plans that allow others to assume the management responsibilities. Good estate planning uses tools—living trusts and durable powers of attorney—to avoid the cost and delay associated with probate court. Does your estate plan anticipate the bereavement effect?