I was thinking the other day that although my wife and I make all of our financial decisions together, I am usually the one pulling the trigger and moving the money around. I like to read boring terms and conditions, geek out on all our tax stuff, deal with real estate, etc.
I have a passion for personal finance, which helps! She does not — and I don’t blame her as most people find this shit boring.
Anyway, this morbid thought came to mind … If I die before we’re financially independent, my wife might have a hard time converting our “couples FIRE plan” into a “single person’s FIRE plan.”
Thinking about death isn’t fun, and planning for it is even worse. But hey, we all die someday. And with the increased shark sightings at my local surf spot recently, maybe I’ll be gone sooner rather than later. 🤷♂️ Bad joke — sorry.
Until now, I haven’t done much estate planning. Since we don’t have kids yet and no big debts, I’ve kind of just assumed that when I die, my wife would be fine financially. She’s certainly capable of figuring stuff out on her own (10x my smarts). But because our portfolio landscape is a little messy right now (various real estate investments, random bank/credit card churning, multiple retirement accounts, etc.), maybe it’s time I start documenting some of this stuff and coming up with a formal plan that would help her.
So, I started writing down some changes my wife would want to make to streamline our (her) finances when I am no longer in the picture. Our overall FI strategy wouldn’t change that much (Coast FI), but having some written plans is never a bad idea — especially for someone dealing with grief of a lost loved one.
Below is a draft letter, which is just a starting-off point. This coming year I’m going to prioritize more official estate plans, including a will, proper records, and all that grow-up stuff I should have started years ago.
***BTW… As I was researching some of this estate planning stuff, I came across 2 much more thorough articles you might want to check out. Checklist for when a spouse dies and Write this letter to your family before you’re gone.***
Things to Do With Our Money If I Die
“Dear beautiful wife,
So sorry I broke my promise to live until we’re both 100… And I’m even more sorry about the financial shitshow I’m leaving behind! Hopefully, this letter will help you clean up the mess, simplify our stuff, and help you create a new/clean plan moving forward.
Things to Do Immediately
Nothing! Honestly, there’s nothing you need to worry about within the first few weeks of my death.
- You have enough cash in our checking accounts to live for a few months.
- Your name is on ALL our cash accounts as a joint owner.
- ALL our credit cards are on auto-pay.
- ALL our bills and utilities are on auto-pay.
- ALL our properties and syndications are cash flow positive with rent auto-deposited into our accounts.
So don’t freak out or worry about money right away. Nothing needs to be handled urgently.
Things to Do Within ~1 Month
Before you can do anything with our (your) accounts, you’ll probably need to show the bank/brokerage/etc some paperwork, like official copies of my death certificate and our marriage certificate. A copy of our marriage certificate is with this letter! But you’ll have to order my death certificate from the city or county. Order a few of them. You might be surprised how often you have to give someone this document.
To start taking action, contact the Social Security Admin office and report my death. You can do this over the phone (1-800-772-1213) or in person at an office.
- If we have a child, you are eligible for monthly survivor benefits of $2,132 per month starting right now, until the kid is 16! Also, the child gets $2,132 per month. So in total, you’ll receive $4,264 per month.
- If we don’t have children, you’ll only get survivor benefits when you reach retirement age. ~It’s like $2,843 per month starting when you’re 67.
Next, (this is optional, totally up to you) withdraw $20k – $50k in cash from our taxable brokerage account (TD). You will need to sell some stock to do this — just call the TD Ameritrade number and they will walk you through it. Transfer this cash into our checking account.
Use this cash to:
- Cover funeral costs (Don’t do anything fancy – just throw a massive party and invite all our friends! Maybe fly my fam out from Australia?)
- Take time off work, as much as you need. 6 months, 1 year, or longer, it’s up to you.
- This cash will cover living expenses (auto-pays the credit cards)
Please don’t feel bad for taking time off work and spending our money. Spending $50k only puts a tiny dent in our overall net worth and won’t majorly derail any of your early retirement plans.
Things to Do Within 1 – 3 Months
Log into our Mint.com account, and you’ll see a list of all our assets, accounts, credit cards, etc. These are also all listed in our Net Worth spreadsheet. Here is what to do with each of them:
Checking Accounts: Since you are listed as the primary beneficiary on all my accounts (100%), you don’t need to go through the probate process. Just call the bank directly and change them into your name. For any old account with a $0 balance, just close the account completely. You probably only need 1 main checking account going forward.
Credit Cards: Sorry we have so many, you really only need 1 going forward! Contact all of the banks and credit card companies and cancel the cards in my name with a $0 balance. These are old and no longer needed. You just need 1 main CC going forward → whatever one you decide, just make sure bills are auto-paid from the main checking account each month.
Investment Accounts: Again, for the ones in my name, you are listed as the primary beneficiary (100%). You can deal with the banks/brokers directly to change the names without going through probate.
Joint brokerage: Change this into your sole name. Should be easy-peasy.
My IRA: They will convert this into an “inherited IRA.” Don’t touch this account, just let it grow until the year 2045. (That’s when I would have turned 60). There will be about ~$1M in this account by then. You’ll be taxed when you withdraw this later in life, so do it in small amounts annually as needed.
Roth: As my spouse (and listed primary beneficiary) you can just change this account into your name, and it will be treated as if it was yours all along! (Ideally, try to consolidate my Roth with your existing Roth!) This is called a “Spousal Transfer”. Remember, Roths grow tax-free so leave the assets in this account alone as long as possible.
HSA: Same as the Roth → do a “Spousal Transfer” and this now becomes your HSA account. Let it grow tax free as long as you can for future medical costs.
Gift accounts for nephews: This money technically isn’t ours, it’s owned by our nephews. But since they are still minors, an adult custodian must be assigned (me currently). My advice would be to change the custodian to the kids’ parents → get the management off your plate.
Physical Rentals: Contact xxxx at xxxx management company and she’ll help you transfer the titles into your name. Since we have joint ownership, when I die, the ownership should revert to you as the sole survivor.
Syndications: The full list of contacts is *here.* Notify everyone and ask them how to change the ownership into your name. The private partnership agreements make this pretty easy and your name is listed on most of the shares anyway.
Things to Do Within 3 Months – 1 Year
Set an appointment with our tax guy, xxxxxx. Tell him everything that’s going on, the changes you’re making with our assets and ask him what forms to save and collect. He’ll help file your taxes.
List and sell all the physical rental properties. Xxxxx will help you do this! Put all the sale proceeds into our TD brokerage account. Invest everything in VTI, just like all the other money in there. (This is optional, of course. But I think you’ll be much better off owning no physical real estate.)
Figure out the DMV process to put the Prius in your name. Here’s a list of forms and paperwork you might need for that.
Contact my retirement broker in Australia. I have about $30k down there in a retirement account and you are the non-contingent beneficiary. I believe you are able to “withdraw” these funds as a lump sum, being that you are not an Australian citizen. My parents can help you research and figure out that crap. If you’re able to get the funds out, move the money to the U.S., stick it in your brokerage and buy VTI.
Things to Do Between Years 1 – 5
I’ve got some good news and bad news…
The bad news is, we are not financially independent yet. So you’ll have to continue working at some point, and growing our (your) retirement nest egg.
The good news is, you have a 1M+ net worth, which gives you considerable momentum! If you can cover your basic living expenses and leave all the investment accounts untouched, you will probably retire before your 45th birthday! We’ve been on this train for a while already — Coast FI baby!!
Some things to help you out…
Take a year to figure out your *new* approximate annual spending (without me in the picture). Continue to use Mint.com to track expenses and spending trends.
Keep using our budget template in *google docs* to make sure you’re on track each year.
If you overspend a little within a year, no problem! It will just take you a tiny bit longer to reach FI. A $10-15k variance isn’t a huge deal at this point. Don’t stress.
If you underspend a little within a year, that’s great, too! Keep putting all excess savings into the brokerage account and buying VTI.
Track your net worth every few months to make sure things are trending upward. If the market crashes or has dips, don’t freak out. Just leave everything untouched and let it rebound.
Once your net worth reaches 25 – 30x your annual spending, you’ve reached FI and can do whatever you want for the rest of your life!
You know most of this already, but I wanted to write it down anyway. It really is this simple, and you can do it.
My Wishes for the Rest of Your Life
You get to design your own life after I die. So don’t feel compelled to follow any of the plans or advice that I give.
That being said, I hope you find and pursue work that you truly enjoy and are passionate about. I know teaching is an underappreciated and underpaid profession, but you have a gift and I encourage you to continue sharing that with the world.
I hope you spend and enjoy all of our money. Please don’t feel bad about treating yourself, living comfortably, and giving as much as you can to others.
Love you so much,
PS: If and when you are ready to start dating again, there’s a dating app — FireDating.Me — where you might be able to find another personal finance nerd to date! Just don’t get remarried before you turn 60, or else you’ll forfeit my Social Security survivor benefits! (Actually, never mind, you’ll be FI long before then anyway and won’t need that money.)
Well, there you have it. That’s my starting point and I’ll build from here.
Now if you’ll excuse me, I’m off to go cry my eyes out and hug my wifey for 100 hours.
Any of you readers created a letter like this with a financial roadmap for your spouse or heirs? Care to share some stuff that you included — and perhaps things I’ve missed in mine?
Killer resources and apps:
- Best Budget Templates & Spreadsheets (FREE)— The best free budget templates from around the community! Including the ones I use :)
- Personal Capital* (FREE) — A great app to track your investments and net worth. You can see an in-depth review we did here from a millionaire who checks it daily 😂
- You Need a Budget (YNAB)* (FREE TRIAL, then $14.99/mo or $98.99/year) — One of the BEST budgeting methods in the space, with new users saving $600 on avg their first two months, and more than $6,000 over their first year! Check out my friend Vic’s review of YNAB here that went on to completely change his finances 💪
- Digit (FREE 6 mo. Trial, then $5/mo) — This is one of my favorite apps for automatically saving money, and I even came on board as an advisor I believed in them so much! You can see my full review on Digit here.
- Acorns* ($3-$5/mo) – Similar to Digit, this app helps you automatically INVEST money by rounding up all your transactions to the nearest dollar and then investing it right away for you. My full review of Acorns can be found here.
- Honey (FREE) — By far my favorite coupon service out there! Click the Honey button any time you're about to buy something online, and BOOM - any discounts it finds will be automatically applied at checkout. You can see my write up on them here.
- Credit Karma* (FREE) — An easy way to check and monitor your credit score AND report! See my full review of these guys here.
- My Favorite Blogs + Books < -- Click here to see all my other recommendations!