How does one prepare to take over the family finances?


October, 2010 |

“When the world appears to collapse, it is important to know that you have a team of professionals to help you.”

“This is Barbara Wood. Harry died suddenly last night. He always said if anything happened to him, you and your team were to be my first call. I don’t know what to do!”

The death of a spouse, a divorce or an extended illness often forces people to begin managing on their own. It can be frightening. When the world appears to collapse, it is important to know that you have a team of professionals to help you navigate the emotional and financial road ahead.

After Barbara called, we moved to secure long-term financial stability and to give her some sense of control. While some steps have to be taken immediately, typically individuals should take the time they need to grieve, and defer any major financial decisions for at least one year. Often the impulse is to sell the house or to cut back on spending. However, it takes at least a year to understand what your true cash-flow requirements will be. Emotional decisions to sell properties or change lifestyle may not be necessary when calm begins to return.

Here are five simple steps to get a solid footing, short and long term:

  1. Speak to your financial advisor, who should coordinate a meeting with your other trusted advisors—normally your trust and estate attorney, CPA and insurance professional. In a coordinated effort, they should develop a solid synopsis of your assets, liabilities and short- and long-term cash-flow requirements.
  2. Your advisor should reevaluate your financial plan with both the new and existing information gathered from the trusted advisor meeting.
  3. A balance sheet and cash-flow statement should be developed, allowing you the comfort of knowing that your current short-term needs are taken care of so that you can attend to your immediate family matters.
  4. Reexamine who is named as beneficiaries on all accounts, insurance policies, and trust and estate documents.
  5. Coordinate the incoming insurance and pension funds with your advisor. A longterm asset-allocation strategy focusing on your personal risk parameters and cash-flow needs can then be developed. This approach allows an individual to get a better handle on the immediate short-term cash requirements while getting an overall picture of the longer-term needs. By doing so, anxieties about making immediate decisions should be allayed, which allows the time to attend to the more important family matters at hand.

Today, Barbara is enjoying her life and is just back from a European trip with her grandchild. Remember that when life throws you an unexpected change, you should slow down and take things one step at a time. You will get through it.

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Bill Loftus

Bill is one of four founding partners of Coastal Bridge Advisors.   Bill leads the Corporate Executive Services, Lending and Alternative Investment operations of the firm. Bill is also responsible for overseeing new business development and the management of the firms west coast operation. With a career spanning almost 30 years, Bill began his career at …

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