Personal Finance After Death or Divorce

Finances after death or divorce | BCBusiness

You’re suddenly single. Here are five steps to secure your financial future

Whether through death or divorce, losing a spouse is emotionally overwhelming. For many, it can also have devastating financial consequences. This can be particularly true for women, who, statistically, live longer than their husbands and may not have been involved in the family’s finances or may lack the financial knowledge of their spouse.

While the best thing you can do is prepare for financial self-sufficiency before a major loss, there are steps you can take to bring you some financial peace of mind if you suddenly find yourself in this position. Here are five essential things to do when you lose a spouse:

1. Create Your Personal Balance Sheet

If you find yourself on your own, it’s important to have a snapshot of where you are at financially.

You should figure out what you own (your assets) and what you owe (your liabilities). Your net worth is the difference between your assets and liabilities. To determine this, first list your assets: home, bank accounts, vehicles, investments, etc. Next, list your liabilities: mortgage, credit-card debt, loans, etc. Then subtract your liabilities from your assets. That is your net worth.

Understanding how much net worth you have now and how much you will need in the future for retirement is an essential part of your financial plan, and an important piece of information in your new circumstances.

2. Evaluate Your Investments

If you weren’t the one in the relationship who took care of the investments, you must now do so. A first step is to understand how the assets in your portfolio are allocated and how much risk is in your portfolio. In general, the more equity (stocks) versus fixed income (bonds) in your portfolio, the higher the degree of risk and volatility. Your asset allocation (the percentage of your investments in stocks versus bonds) must let you sleep at night when inevitable market corrections occur.

3. Educate Yourself

If finance and investing were foreign to you when you were a couple, they cannot continue to be now that you’re single. If you are now responsible for your own well-being and your children’s, resolve to have at least a cursory understanding of the financial world. Obviously it’s best to do this before you lose a spouse, but if you haven’t, now is the time to start. There is plenty of information available to help you quickly become more financially literate.

Most colleges and universities have continuing education courses on personal finance and investing that will get you acquainted with the terminology. If you would rather learn on-line, one of the best courses available is through the Canadian Securities Institute.

4. Find a Good Financial Advisor

If managing your own investments is not something you want to do or have the skills to do, you need to find a good partner—a professional advisor you can trust to look out for your financial well-being.

5. Attend to the Details             

Whether you lose your spouse through death or divorce, you will likely have to update many of your financial documents.

Review your will and life insurance policies to be sure they reflect your wishes. Investment account and bank account registrations will likely need to be changed on any account that was jointly owned. Your financial institution will require you to present certain documents to make these changes. While these requirements will vary by province and financial institution, in the case of death of a spouse, you will need an original or notarized copy of the death certificate (or funeral director’s statement) and an original or notarized copy of the probated will. In the case of divorce, where investment assets are being divided, you will need a notarized copy of the divorce agreement.

While reviewing your investment accounts, be sure to update the beneficiary section on all RSP and TFSA accounts.

The loss of a partner through death or divorce is traumatic. These steps will help you draw up a game plan to lessen your stress load while ensuring your financial well-being and that of your loved ones. 


Patti Shannon is a vice-president and portfolio manager at Leith Wheeler Investment Counsel Ltd., an independent Vancouver investment firm. This article is not intended to provide investment advice, recommendations or offers to buy or sell any product or service.