Chapter 19
Other Changes to Think About

In This Chapter
  • Recognizing the difficulty of death and changing relationships
  • Dealing with the financial impact of death
  • Knowing how divorce affects finances
  • Sorting out financial matters in remarriage
  • Coping with an empty nest
  • Illness and finances

While all major life changes can be challenging and difficult, death and changing relationships are among the most painful.

Relationships shift and alter with time. They don’t stay the same. Children grow up and develop completely different relationships with parents than those they had when they were very young.

As parents age and grow dependent on their children, the parent-child role may reverse. Marriages that last for many years undergo transition upon transition. Marriages that don’t last usually cause pain and stress to both people. Friends may drift in and out of our lives, depending on circumstances.

While changing relationships can be difficult, death is even harder to cope with. We all know that every living thing must someday die, but somehow we’re always unprepared when a death occurs within the circle of people we know and love.

In this chapter, we’ll explore some of the most difficult changes we encounter in our lives, and how they can affect us emotionally, physically, and financially.

Nobody Lives Forever

We can anticipate death. We can expect it. We can even be relieved when it finally comes to a person who’s been very ill for a long time. We can’t, however, minimize the pain that comes with losing somebody we love.

We all will face death within our lifetimes. Some of us avoid it for many years, not even losing a grandparent or family friend to death until we’re in our 20s or 30s. Others encounter death early on. A parent dies in an accident, or a brother or sister succumbs to a deadly childhood disease. Either way, we all will have to cope with loss in our journeys through life.

Losing a Parent

In the natural circle of life, our grandparents should die before our parents, our parents before us, and we before our children. And generally, that’s the case.

Even though we understand this cycle, it’s extremely difficult to lose a parent. This is partially because losing our mother or father forces us into a new role. We are no longer the “next generation.” We move from the second generation to the first. And, we lose the mother-child or father-child bond that we shared with a parent. Losing your second parent can stir up feelings of abandonment—that you’re all alone in the world.

[image] Money Morsel
You may experience additional grief when a parent dies through the grief of your children, who are mourning the loss of a grandparent. Be aware of your children’s grief, but don’t try to put your own feelings aside in order to comfort them. Experience the sadness together.

Whether your relationship with your mom and/or dad is great, indifferent, or difficult, chances are that his or her death will affect you on many levels. If you didn’t live close to your parent, you may feel sad or guilty that you didn’t have more time with him. Guilt also may occur if you didn’t have a close or loving relationship with your parent. You might wish that you had tried harder to get closer or to improve the situation.

You may feel relief at death if your parent has suffered for a long time, and those feelings might spawn additional guilt. Know, however, that feeling relief upon the death of someone who has been suffering is a natural reaction, and actually an expression of your love for your parent. And, you might feel anger or resentment toward a parent who has died. Unresolved issues can sometimes surface, and you may feel angry that Mom died before you had the chance to work them out. Or you might have the feeling that you need Dad to take care of you, and experience anger at him for leaving you on your own.

Because our relationships with our parents change so much from the time we’re kids until we reach adulthood, they’re usually complex and operate on many levels. When a parent dies, we experience complex emotions, as a result.

And, if your parent was elderly, chances are that other people may not fully recognize or acknowledge your loss. They’ll tell you that you should be happy for the years you had with your dad, or that your mom was lucky to have a good, long life. While those sentiments are true, they don’t encompass the grief you’re feeling at the loss of your parent.

On a practical side, the death of a parent may mean a tremendous amount of work for you—or for you and your siblings, if you have them. You may have to oversee the sale of a home, dispose of all possessions, sort out personal property, or execute your parent’s will. These topics will be covered more thoroughly in Chapter 25, “Helping Aging Parents Plan.”

If you’re an heir to your parent’s estate, you’ll have to make some decisions about what to do with the money or property you may receive. We’ll discuss that topic in some detail in Chapter 22, “Investing Lump Sums.”

[image] Don’t Go There
Don’t feel that there’s something wrong with you if you’re devastated by the loss of a parent. We each have a unique relationship with our parents, and we’ll each experience their deaths differently. Don’t apologize for your grief, and don’t allow others to rush you through the grieving process.

Many of us have already lost one or both parents. If not, chances are that you will before too long. While you can’t ever fully prepare for the death of someone you love, know that you can expect to feel many different emotions on many different levels. If you find it’s necessary to do so, get help from a religious leader, trusted friend, support group, or counselor.

If a Spouse Dies

Losing a spouse in middle age—whether unexpectedly or after a long illness—is a devastating experience. Of course, it’s never easy to lose your wife or husband, but experiencing this loss in middle age instead of old age can be particularly distressing.

Suddenly, you’re no longer a part of a couple. You’ve lost the person to whom you could turn for advice or consultation. Along a practical line, you’ve lost the other half of the team that shared financial and household responsibilities. Your children have lost a mother or father, and especially if they’re young, you may feel that you need to help them through that.

If your husband or wife dies in middle age, you’ll need to pay close attention to financial matters. This is an extremely difficult task to accomplish as you’re mourning the death of a spouse, but it’s necessary to your future financial health. Hopefully, you and your spouse have addressed the possibility of premature death, and have planned for the eventually. At the very least, you should have a comprehensive will (more about that in Chapter 24, “You’re Never Too Young to Plan”).

Go Figure
About 13.7 million Americans living today have experienced the loss of a husband or wife.

[image] Money Morsel
Funerals can range in cost from $5,000 to $10,000 or more, depending on your location and the services you choose. And if your spouse was sick before death, you may have medical expenses to pay, as well. A financial advisor can help you to prioritize bill payments when necessary.

Probably the first matter you’ll need to deal with following the death of a spouse are funeral expenses. If you haven’t preplanned and prepaid, this can be trying, especially if you don’t have much extra money.

Many surviving spouses use benefits from their husband or wife’s life insurance policy to pay for funeral expenses. And, many funeral homes are willing to wait for payment until the insurance policy has been processed and benefits paid. You can discuss this matter with personnel at the funeral home you plan to use. Or better still, designate someone else to handle these types of matters.

Assuming you and your spouse had a will, you’ll need to settle your husband or wife’s estate, according to the terms of the document. You should work with your family lawyer or a trusted financial advisor on this matter. It’s probably not the best idea to hire someone you don’t know well to settle an estate, particularly if you don’t plan to be overly involved in the process. It’s best to be able to hand the matter over to someone you trust in order for you to be able to work through your grief and concentrate on other matters.

Another matter you’ll need to pay attention to is resolving any debt that you and your spouse, or your spouse alone, had. In some states, creditors must work through the probate process in order to collect debts that were the deceased’s alone. If you and he had joint debt, however, you’ll still be responsible for paying it.

Some credit card companies and retail stores will waive the late fees for debt incurred by someone who dies. They probably, however, will continue to charge interest on the money owed. You can check, or have someone else check, with creditors to see how payments after a death are handled.

Another financial matter you’ll need to look into is your spouse’s health care and retirement benefits. If your spouse dies while you and your children are covered by his employer’s health-care plan, you may be eligible to buy temporary extended health care coverage for up to three years. You’ll have to pay for it, but the cost probably would be lower than that of coverage you’d get on your own.

If your spouse had a 401(k) plan, you’ll need to find out the terms of the plan so that you can plan accordingly. If he had a pension plan at work and is vested in the plan, you should be eligible to receive a percentage of the monthly benefit he earned up to the time of his death. Check with the human resources department at his place of work, or ask your lawyer or financial advisor to give a call.

You also should know that if your spouse dies, leaving you with dependent children, you might be eligible for monthly survivor’s benefits from Social Security. Contact your local Social Security office for more information, or ask your lawyer or financial advisor to look into it.

After the immediate financial issues that occur after the death of a spouse have been resolved, you’ll need to think carefully about what, if any lifestyle changes you’ll need to make. You should develop a new budget that reflects your changed circumstances, listing sources of income, savings, and expenses.

Again, it’s usually best to work with a trusted professional on these issues. Dealing with the death of a spouse consumes your time, energy, and emotional capacity. It’s a good idea to get help with financial matters to assure that they get resolved if you’re not entirely able to do so yourself.

Losing a Child

Losing a child is no doubt nearly every parent’s greatest fear, and the most awful experience a parent can ever face. And yet, nearly 20 percent of all parents do at one point or another experience the death of a child. Government statistics estimate that 228,000 children and young adults die every year in the United States. That number doesn’t include miscarriages, stillbirths, or the deaths of children who are 40 years or older.

Losing a child defies the natural cycle of life. It destroys the dreams we have for our children, and steals the legacy we’d planned on leaving behind at our deaths. It’s emotionally devastating and can destroy parents who don’t have the benefits of strong support systems.

A parent who loses a child may become withdrawn, perhaps because she’s unable to be around other children without feeling the terrible loss of her own child. She may become bitter and resentful toward relatives and friends who still have children. If she’s married, she may on some level blame her husband for the death. Or she may blame herself.

Parents believe they should take care of their children. When a child dies, it’s natural to feel a tremendous sense of failure, betrayal, and loss.

Although losing a child does not normally have the direct financial implications that losing a spouse would, there can be indirect effects.

[image] Money Morsel
Parents with a child who dies can find information, support, and encouragement from Compassionate Friends, a nonprofit organization formed to help bereaved parents and other relatives. You can find Compassionate Friends at

Parents who experience the death of a child may find themselves unable to go back to work when their bereavement leave ends. Or they may go back to work and find that they’re totally ineffective at doing their jobs.

Employers generally are sympathetic toward employees who lose a child, but the degree to which they’re willing to bend for an employee will vary. A bereaved employee who is finding it difficult to satisfactorily complete his work should seek counseling. Ask the human resources department what benefits may be available to cover counseling or other bereavement services.

When Friends Die

Losing friends to death is a clear and unrelenting sign of our own mortality. We expect that we’ll lose grandparents, parents, and older relatives, but having a friend of about the same age die is a real slap in the face.

As difficult as it is to lose a friend, remember that you’ll need to be as supportive as possible to the members of his family, who probably are feeling the loss even more strongly than you are. If there are children still living at home, you could offer to keep an eye on the kids while the surviving spouse takes care of business or if she needs a break.

Try to keep surviving family members involved with the activities they enjoyed before the death, but don’t push them to participate before they’re ready to. And don’t get so busy caring for your friend’s family that you push away your own feelings of grief for your loss.

Death is an extremely difficult part of life, but a part of life, nonetheless. Facing the fact that we certainly will one day be affected by death can help us be a bit more prepared to deal with it when it occurs.

Marital Status

A change in marital status can result in big changes to your financial situation. While middle age used to be a relatively calm period of life, many people today experience all kinds of life changes while in their 40s and 50s.

They divorce. They remarry. They become parents again after already having raised children. They become stepparents. They worry about whether their kids and stepchildren will get along. Life can be pretty exciting during middle age, and pretty hard on your finances, as well. If you’re experiencing—or expect that you will experience—a change in marital status, you’ll need to take steps to protect your personal financial situation.

Dealing With the Big D

While death can change marital status in an instant, it is more often divorce or separation that does so during middle age. With about half of all marriages in America ending in divorce, the big D is forcing millions of people to reevaluate their lives, and their financial situations.

Getting divorced is rarely a simple matter, emotionally. Many people see divorce as a symbol of betrayal of trust, broken promises, or failure. It causes hurt and anxiety. If children are involved, you’ll need to deal with their feelings concerning the divorce, as well as your own.

If you’re facing an unwelcome divorce, keep in mind that there are many support groups and other help available.

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Prepare yourself for an impending divorce by reading Divorce and Money: How to Make the Best Financial Decisions During Divorce, published in 1998 by Nolo Press. It’s written by Violet Woodhouse, a lawyer, and Victoria F. Collins, a certified financial planner with a Ph.D. in psychology.

Divorce and Your Finances

While divorce can wreak emotional havoc, it also can be extremely hard on your financial situation. If you’re looking at a divorce, it’s extremely important to pay close attention to financial issues and make sure that you get what you’re entitled to. Many people have been forced to dramatically alter their lifestyles after divorce due to financial considerations.

Basically, the legal steps of divorce, and actions you should take at each step, are as follows:

  • Decision to divorce. When the decision is made to divorce, you should consult a lawyer, or begin some legal research on your own. You’ll need to learn about your state’s laws in regard to issues such as child custody and support, alimony payment, debts incurred after separation, valuation of marital property, and so forth. Any joint bank accounts should be frozen or closed at this time, and you should organize all financial papers and documents.
  • The couple physically separates. Although this doesn’t always happen, normally either the husband or wife leaves the household and takes up residence elsewhere. Obviously, this can cause financial problems. If you’re still paying a mortgage and keeping up with the expenses of a home, finding cash to rent an apartment or other type of dwelling can be difficult. Each person should document all debts incurred, including moving expenses. Money spent on improvements or repairs to the marital home should be noted. Keep track of any joint bills you pay, and make sure that you have adequate insurance policies for the current living arrangement. Start thinking about tax issues at this point, deciding whether you’ll file jointly or separately.
  • Filing for divorce. One spouse files the complaint or petition for divorce, officially beginning the divorce process. The other spouse will need to file an official response to the complaint or petition.
  • Requesting temporary court orders. One spouse files a request for temporary court instructions regarding issues such as alimony, child custody and support, and visitation. The request may also ask for one spouse to pay the other’s legal fees. All child support and alimony payments should be documented in order to assure that court orders are being followed and for tax purposes.
  • Legal discovery. Legal discovery is a series of procedures used to obtain information about your divorce case. It involves financial fact-finding, and identification and consideration of the value of all marital property. Child support and alimony payments to be made once the divorce is final will be set during this period. You should make a list of all assets such as stocks, bank accounts, real estate, automobiles, and so forth. You may need to hire a financial planner or tax advisor who specializes in divorce issues during this stage.
  • The settlement. Following the discovery process, legal and financial settlement negotiations will begin. If both parties are in reasonable agreement concerning division of property and other matters, these negotiations can be fairly simple. Lawyers representing each party can conduct these negotiations, as can a mediator that both parties agree to use or an arbitrator with the power to make binding decisions that will be transferred back to the court. An arbitrator normally is used when a couple is not cooperative as to the division of property and other matters. The legal settlement can be long and drawn out, or fairly simple, depending on circumstances and the people involved. Make sure that all legal and financial issues—such as alimony and child support, child custody, and tax implications—are addressed at this time.

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Keep in mind that professionals are expensive to hire. The more amicable you and your spouse can be during the divorce process, the fewer professionals you’ll need. This will have a positive effect on your financial situation.

  • The settlement agreement. This is a formal document that sets forth the terms of the settlement.
  • The judgment of divorce. This is the document that finalizes the divorce and ends proceedings. Once the divorce is final, you’ll need to make sure that all legal documents, such as deeds and wills, reflect your change in marital status and any changes in ownership. Check all bank records, stock certificates, insurance policies, and so forth.

If you and your spouse are willing, you can work together during the divorce process to make sure it has as little negative impact on your finances as possible. Remember that a long, bitter divorce almost always costs more than an amicable one.

An important fact to keep in mind is that alimony (sometimes called separation maintenance) is tax deductible for the person paying and considered taxable income for the person getting it. Child support payments, on the other hand, are neither tax deductible nor considered as taxable income.

[image] Adding It Up
Child support, usually paid to the custodial parent by the noncustodial parent, is money designated for the care and support of the dependent children. Alimony is money paid to one spouse by another, as directed by the court.

One spouse may be directed by the court to help with expenses, other than child support, which are incurred by the other spouse. These could include paying premiums on insurance policies, paying some or all the mortgage, and so forth.

As you can see, divorce is not a simple matter, financially. If it happens to you, be sure to get the professional advice that you need. Keep in mind that you may need a post-divorce budget to help you adjust to financial changes. Plan carefully to avoid unnecessary problems.

Marrying Again

Should you decide to remarry after a divorce or the death of your spouse, think carefully about how the marriage will affect your finances.

There are many issues to consider. Will you combine finances, or keep them separate? Will you be responsible for contributing toward college expenses for stepchildren? How will you handle estate planning and passing along money to your children? Can you afford to establish a new household while still helping with the expenses of your previous home?

Some financially established couples who marry in middle age decide to keep their finances separate. Others combine all their assets and liabilities. Others compromise by setting up separate, personal savings and checking accounts as well as joint accounts for household use.

Many financial experts recommend that couples who are marrying for the second time around use a prenuptial agreement, particularly if one person has significantly greater assets than the other. A prenuptial agreement (also called a “prenup,” for short), as you probably know, outlines how assets will be divided in the event of death or divorce.

Go Figure
The Stepfamily Association of America reports that nearly 45 percent of all weddings are second marriages for at least one partner.

Even if you don’t go for a prenup, you and your spouse-to-be should sit down for a serious financial discussion. Take a look at each other’s credit reports to be sure there are no surprises. If there are kids involved, discuss matters such as allowance, spending money, and cars. Be sure that each has updated the beneficiary on bank accounts, savings bonds, and IRAs.

Discussions on matters such as these might fly in the face of romance, but there’s nothing romantic about learning two months into a marriage that your spouse has tens of thousands of dollars in debt that you knew nothing about.

Another matter you’ll need to discuss is your wedding. While you may be thinking only about making the event beautiful and meaningful, you’ll need to consider its financial impact, as well.

If you and your spouse-to-be are very well off financially, go ahead and plan away. If it comes down to a choice between a big wedding and his next month’s child support payment, however, you’d better start scaling back your plans.

The Empty Nest Syndrome

Sooner or later, most kids leave home to start lives of their own. Granted, they do this at varying rates and with varying degrees of success. Some leave, come back, and leave again. Others leave for far-off places and come back only for major holidays or events. A few never leave, but that’s not what we’re discussing here.

The empty nest syndrome, which is a period of anxiety or depression that some parents experience when their grown children leave home, has gotten a lot of attention over the past few years. Mind you, it doesn’t happen to everyone, and usually passes after a period of time.

Considering your empty nest in financial terms may shed a whole new light on the issue. If your child has left home to go to college, you’re no doubt coping with all the matters we discussed in Chapter 8, “Paying for College.” If he’s left home because he’s financially independent now, and starting a life of his own, you may find yourself with some extra cash. If this is the case, it’s a great opportunity for you to boost your retirement savings.

I Need to See the Doctor, Please

Illness can cause major, unplanned, and unwelcome changes in our lives. It also can wreak havoc with our finances. If you’ve learned recently that you, or someone in your family, has a chronic or serious illness, you’ll need to take steps to plan for the financial implications.

Consider such questions as whether or not the illness will result in loss of income, and how your savings will be affected. If your husband is the primary wage earner, for instance, and has just been diagnosed with lung cancer, how much longer may he be able to work? And, might you be forced to leave your job in order to care for him?

Check first to see what benefits may be available through the ill person’s place of employment. Someone who is already sick won’t be able to get disability insurance, but if you or your family member has a policy, look over the terms and discuss how you’ll use the benefits from it. Look at the terms of health insurance policies and try to anticipate any costs you may have to cover on your own.

Hopefully, you have an emergency fund containing about six months worth of wages put aside to help you to meet expenses and cover lost wages, if applicable. If the ill person is married and the primary earner for the family, the spouse may have to get a job to help meet expenses. You may choose to consult a financial advisor to help you work out how you’ll deal with your changing situation.

Medicare, the federal health insurance program for people over 65, also covers certain disabled people who are younger than 65. To find out if you or a family member may qualify, go to Medicare’s web site at You’ll be able to get a phone number for an office near you and can make an appointment for a consultation.

If you or your family member is able to be at home during the illness, look into community services in your area that may provide in-home help or funding for in-home help for the ill and their caregivers. These services range from unskilled help with chores such as dressing, cooking, or bathing, to fully skilled nursing care. The cost of such services, of course, varies depending on where you live and what type of help you need. Unskilled care normally can be obtained for anywhere from $8 an hour or higher, while skilled nursing care can cost upward of $40 an hour.

If you and your spouse or partner were forward thinking and had purchased long-term care insurance, be sure to check on what services are covered. Many people think long-term care insurance is for nursing home care, but most policies cover services such as home health care, assisted living care, and the cost of community-based services.

Serious or chronic illness is a great source of stress, both to the person suffering from it and for family members. Don’t hesitate to talk to your doctor, a trusted friend, or your minister or rabbi about how you’re feeling.

Life changes, while challenging, also can be rewarding. They allow us opportunity for growth and offer a chance for us to assess where we are in life and where we’ve come from. Life changes also can be financially challenging. Being prepared to deal with these changes on all levels can go a long way in bringing us through them successfully.

The Least You Need to Know
  • Of all life’s changes, death and changing relationships may be the most difficult to cope with.
  • Losing a parent can be far more difficult than you might expect.
  • The death of your spouse can have tremendous financial implications as well as being emotionally devastating.
  • Divorce can wreak havoc on a couple’s finances, so you need to know what to do to minimize the damage.
  • If you’re marrying again, you’ll need to carefully address how you’ll handle financial matters.
  • Serious or chronic illness, either your own or a family member’s, can impact negatively on your finances.
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