The planner without a plan – Teresa’s story

Teresa* was first married at a young age and had four children in fairly quick succession. When her marriage fell apart, she was left with young kids to raise on her own and little money. She worked hard for a few years and did manage to keep things together but it was a struggle. Then she met her second husband, Kevin*. He was charming, confident and by all outward appearances financially successful. He was a financial planner with a thriving business. The relationship blossomed quickly and they soon moved in together. Four years later they were married.

One morning eighteen months after their wedding, Teresa was upstairs in her home when she heard her son cry out from the kitchen. She went racing down to find Kevin on the floor by the breakfast table, unconscious and breathing with great difficulty. He died minutes later having had a massive heart attack. He was in his forties.Teresa’s world began to unravel at that moment. While trying to deal with shock and grief, she began the long process of sorting out Kevin’s financial affairs. The first of many shocks came when she remembered that he did not have a will. She had attempted to speak to him about it on several occasions but he refused to discuss it. Now she was angry with herself for not pressing the issue. Lesson #1.

The next lesson was even more difficult: He had virtually no savings and was awash in debt. They had always maintained separate bank accounts so she never really knew any of his financial details. He took care of most of the household costs, including paying $2,600 in rent which, as it turns out, they could not afford. He had used borrowed funds from a Line of Credit to pay for their wedding and honeymoon after stripping most of his savings to pay for other debt. He had led Teresa to believe that he was using his own money to pay for everything. There was never any mention of debt or difficulties. In the end, his estate was declared insolvent and Teresa paid thousands of dollars to a lawyer to sort out the estate.

Since Kevin was self-employed, there was no pension or income coming from his business. When Teresa did a bit more digging, she discovered that Kevin earned a fraction of what she was led to believe and his income was dwindling because of some difficulties at work. The amount that he was contributing to their household was not in fact coming from his work, it was mostly coming from borrowed funds.

But there’s insurance right? Yes, but it was inadequate. While it did help Teresa clear off some of her existing debt, she was nonetheless left in a precarious situation. The funeral alone cost $10,000 – all widows discover that dying costs a lot of money.

The most pressing issue however was that Teresa was tied into a lease for a house that she could not afford. When she spoke with the landlord he was unsympathetic. She eventually did extricate herself from the lease after a battle, but then she had to move her family out of their beloved neighbourhood. Another trauma.

Thankfully, Teresa has a very supportive family and a job that allowed her to take several months off work to deal with the issues and to grieve. She is now in a much better place financially but it has been very difficult for her and her children. She has had to work through feelings of anger, betrayal, shock and isolation. When I asked her if she had advice for women, her response was emphatic: yes!

1. Insist on full financial disclosure. Know the balances and details about every account, every investment and every debt. Be sure to have a list of passwords as well.

2. Do not depend on your spouse for your standard of living. If they leave or die, can you pay for everything yourself? If not, then make a plan.

3. Always have emergency funds available in your own name, whether in the form of savings or a Line of Credit.

4. Ensure that you have a valid will with all wishes outlined in detail.

5. Be honest with yourself when you enter a serious relationship. Discuss your values and expectations regarding finances. If you are not on the same page, you may want to ask why and ensure you have your own resources.

Do you know someone with a story? If so please pass on my contact information. I’d love to interview them.

*Names and some details changed to preserve anonymity

 

 

 

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