How you should prepare now for the death of a spouse

What needs to be in your will
What needs to be in your will

When Christine Baumgartner's husband, Tony, died suddenly at age 64 in 2012, it was tragic but not a shock. It was, unfortunately, something the couple had been planning for.

In fact, Tony had been planning for his death since his teenage years, long before he met Christine, a dating and relationship coach in Orange County, California. Tony was born with a heart condition. When he was 16, his father died of a heart attack. Two years later, when Tony was 18, his doctor told him he would probably be dead by 26.

When Christine met Tony in 2005, he was 57. On their fourth date, he explained that he had been living with a chronic heart condition, and had, as he put it, "outlived his expiration date."

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Despite the uncertainties, Tony and Christine married in 2007, and while they both hoped to be together for decades, they recognized the importance of planning for the worst. When the worst came five years later, Christine was free to grieve without worrying that she might become financially destitute. Long before Tony passed, he ensured he had a will in place, a retirement account, stocks and a small life insurance policy. (He couldn't get a big one with his medical history.)

"We've all heard of those horrible stories where the widow knew nothing about their finances and was either blindsided by debt or taken advantage of by people who offered to help her manage her finances," Christine says. And so, while Tony handled their money, including filing their taxes, Christine adds, "I knew about every financial detail in our lives."

As unpleasant as it may be, it's wise for spouses to do what they can to be prepared for the other person's death, even if both intend to live for a very long time. It's no easy task, but here's a roundup of important steps to take to prepare for the worst.

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Make sure your documents are in order. That includes any life insurance policies, wills, property deeds, car titles and bank account and investment details. You both should know where these are (ahem, not jammed in some desk drawer) and ensure they're up to date.

Don't neglect that will. Yes, you know you should have one. And yes, you're going to get around to it. But Gary Altman, founder and principal attorney at Altman & Associates, an estate planning firm in Rockville, Maryland, shares a cautionary tale that highlights why it's important to get one written – now.

He represents a 35-year-old mother of two young boys, whose husband recently died unexpectedly. He had no will in a state whose law dictates that 50 percent of his assets go to his wife and 50 percent to the kids unless otherwise legally specified. While this sounds nice in theory, the kids are young, and the money went into a court-controlled account she couldn't touch outright.

"The mother had to go to court to ask to be appointed their guardian and now has to get permission from the courts to use the funds," Altman says.

The more money you make, the more important it is to draft a will, if you care about what happens to your assets when you're gone. The estate-planning industry is currently abuzz because superstar musician Prince, who was divorced and whose son died in infancy, reportedly didn't write a will before passing away.

Organize your shared and individual passwords. If you can't access a bank account, say, because your spouse had a special password you weren't privy to, you can see what sort of trouble can arise.

Spouses should make a list of passwords for all online accounts, including 401(k)s, investments, bank accounts, really everything. This list should be stored in a place that both spouses, and perhaps adult children, know about, says Lesley Weiner, a certified financial planner with MidAtlantic Resource Group in Totowa, New Jersey.

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Plan now, save headaches (and money) later. It isn't fun to talk about death, especially if you and your spouse are as healthy as the proverbial horse. But Keith Newcomb, a certified financial planner in Nashville, Tennessee, says it's a lot cheaper to work things out now versus waiting until you're grieving and emotionally wrenched.

Especially if you need legal help to get your family finances in order, he adds.

"The better organized and prepared you are, the more concisely you can communicate your wishes, and the faster the attorney can prepare documents," he says. After all, notes Newcomb: "Many attorneys work on an hourly rate."

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