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How to Help Widows Avoid Financial Risks of Remarriage

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Often, when a widow remarries, her new husband vows not only to take her as his wife but, so it seems, to take her financially.

This cold fact turns what the widow saw as a match made in heaven into wedlock’s descent straight to economic hell, as widowhood expert Kathleen Rehl tells ThinkAdvisor in an interview.

Financial advisors can play a critical role in helping to avoid such disaster.

A certified financial planner, Rehl, 74, has researched widowhood extensively and sought, from the time she was widowed herself nearly 15 years ago, to help widows smarten up about finances.

Initially, she accomplished this as a financial planner, with her own practice for 17 years, and by authoring a bestseller, “Moving Forward On Your Own: A Financial Guidebook for Widows” (paperback edition-2018). 

Then she widened her scope by presenting to numerous big financial firms and organizations, performing research studies and writing an array of articles.

Remarriage exposes widows to financial risk, argues Rehl, who, in the interview, discusses ways they can reduce that risk and protect their assets from new husbands with questionable intentions.

The tacks include making sure the widow’s new spouse has the means to support himself and keeping her assets separate from his.

Research that Rehl has conducted found that 70% of women experience widowhood. Indeed, the coronavirus pandemic has generated numerous new widows since more men than women are dying of COVID-19.

FAs must understand that a widow’s primary need is to feel safe and secure about her financial future, Rehl stresses.

Most couples’ FAs apparently don’t get it: A study of wealthy women performed by Spectrem Group in 2011 found that 70% of widows fire their advisors after the husband’s death. Subsequent research by others showed similar findings.

In the interview, Rehl discusses her concept of three separate stages of widowhood: Grief, Growth and Grace, or Transformation. The phases, however, sometimes overlap.

She herself was widowed at age 60. By 2020, well into the Transformation stage and remarried for three years, she opted on her 73rd birthday for “ReFirement.” 

That’s not just retirement, she says, but to be involved and fired up by new activities and creative pursuits.

For this former university professor, that means pro bono work for churches and organizations, as well as helping folks document their legacy life stories for family and friends via easy-to-craft autobiographies.

An occasional financial services presentation is still in the cards, such as the April Zoom talk she gave for the Northeastern Michigan Estate Planning Council.

Thinkadvisor recently interviewed Rehl, who was speaking from St. Petersburg, Florida. Elaborating on the fulfilling Stage 3, she remarked, “It’s reinventing yourself and finding new things that give us a buzz.”

Here are highlights of our conversation:

THINKADVISOR: You warn that remarriage exposes a widow to financial risk and that she should make sure her new husband can support himself — job, investments or income from family sources. 

You also recommend that a widow keep her assets separate from those of her new spouse. Why all the precaution? 

KATHLEEN REHL: There are critical financial questions that widows need to discuss with their spouses or partners before they [commit] to a long-term relationship. 

In a study of widows we did [“Widows’ Voices: The Value of Financial Planning,” published in Journal of Financial Service Professionals 2016], the women came out with some real zingers about their experiences when they remarried.

Such as?

One said, “Don’t you let no sad puppy man follow you home and expect that you’ll save him. He’ll take advantage of you. And if you let him live with you and he’s in bad shape financially, you’re in trouble.”

Another said: “He pursued me for three years before I finally said yes. Then he cleaned me out financially in about three months.”

In this case, the man wanted to [commingle] their assets. So the widow put a lot of everything together in joint checking and savings accounts. But the relationship didn’t work out.

Another widow said: “I didn’t bring up the money stuff because I thought it would hurt our relationship before we got married. Boy, was I wrong! He wound up taking everything.”

Does a joint account ever make sense?

There’s one place a widow would want to do joint money, and that’s a joint checking account that would pay for things they do together, like for paying a condo fee; buying groceries; taking care of the electric bill [etc.] Each spouse contributes a certain dollar amount.

[When I was a planner], I had one client couple who said, “We’re already doing that. We each put in 50%.”

But I told them that wasn’t equitable because the husband had Social Security benefits coming in, a pension, a pension from his late wife, a lot of investments and savings bonds that were maturing. 

The wife had none of that, just some IRA money. Her income was about a third of his. So they changed it to be more equitable, and he put in two-thirds.

You’ve researched widowhood extensively. What kept cropping up was: When widows relied on their husbands to deal with finances, once the husband dies, the women have no clue how to cope financially. Right?

Yes, the husband makes all the financial decisions, and she stays uninvolved. So when Harry is gone, she won’t be empowered financially and will be very vulnerable. 

[Moreover], our study found that when these women moved into a new relationship or remarried, they did the same darn thing again: They pushed off the financial responsibility to the new partner. Their solution was “a man is a plan.”

And many married someone who was older, so they were probably going to be widowed a second time and then be in an even worse financial situation. 

That’s compared to women who [early on] stepped up and asked for the help of financial professionals. They became financially empowered. They took a greater interest in finances and were able to manage their lives with or without that new partner. 

Do you recommend that before a widow remarries, she and her husband-to-be sign a prenuptial agreement?

When I was a financial advisor, I advised all my clients to at least talk about it. Most of them did get one. 

When we’re younger and nobody has much money, it all gets put together. But as women [age] and become widowed, they’ve accumulated more assets.

Does a widow lose out on Social Security benefits when she remarries?

Social Security is a tricky one. Every situation is unique, like whether to apply for spousal benefits or survivor benefits.

If a widow has been receiving Social Security on her husband’s work record, are her benefits put in jeopardy when she remarries?

If she’s under age 60 and remarried, I believe she loses the income that was based on her husband’s survivor benefits. If she’s over age 60 and remarries, then I think she’ll be fine. 

But the Social Security rules are changing all the time, and so [it’s best] to research the current rules.

Your husband Tom died when you were 60. What did you do about Social Security? 

I applied for his benefits when I was at full retirement age, which was 67. I received his full Social Security and kept that running for four years till I hit age 70.

Then I switched over to my own benefits, which I was letting cook and grow at about 8% a year. 

The coronavirus pandemic has left many women widowed: More men — especially older men — have been dying of COVID-19 than women. Why do you suppose that is?

Different reasons have been postulated. It might even be related to testosterone — Who knows!

Younger men are dying, too. Their families weren’t even thinking of [such a thing] as a possible [cause of] their death. 

So probably there wasn’t much pre-planning or maybe none at all — not even a will. Perhaps they didn’t have life insurance. Therefore, this is going to leave more younger widows, often with children, in financial difficulty.

You and your present husband keep your assets separate partly because you each have children from previous marriages and want to avoid potential inheritance conflicts. Correct?

Yes. I will not inherit anything from Charlie, and Charlie will not inherit anything from me. 

But we’ve given each other a life estate: We jointly own our Florida condo. Half of it is owned by my trust, and half is owned by Charlie’s trust.

What does the agreement stipulate?

If, say, I die first, Charlie has the right to continue living in the condo for as long as he wants.

But when he leaves — maybe to go to a retirement home eventually or to live with his daughter — half the value of the condo must go back to my estate whether it’s sold or whether he buys out that half. This doesn’t have to be immediate.

You say on your website that you’re “ReFired.” What does that mean?

The idea originated in the late ’90s with someone in the clergy who was trying to encourage people who retired not to just drop off the edge but to stay involved. 

I recrafted it and used the approach with my clients: Doing what you really want to do at that stage in your life. With widows, it would be Stage 3 of widowhood or what I call Grace, or Transformation.

What are you personally doing that you really want to do?

Working with nonprofit organizations to help them establish endowment funds. 

I also encourage people to write [autobiographical] legacy letters to leave for family and friends; and at nonprofit organizations, I lead groups to share stories about their lives.

Tell me more about the Transformation stage of widowhood.

Not all widows go there. Some are very happy just to be in Stage 2, which is Growth — a safe, comfortable place. 

And some never make it out of Stage 1: Grief. Those are the ones that [sometimes] die of a broken heart, which is an actual medical condition [stress-induced cardiomyopathy].

But you want to get past the Grief and the Growth stages, and explore what your new life looks like.

The widows that make it to Stage 3 have a very delightful time because it can mean new friendships and new interests. It’s especially appropriate for charitable giving and philanthropy. Beautiful things can happen there.

Is Stage 3, when a widow is, sort of, reinventing herself, the time to confer with a financial advisor?

There’s some number-crunching, like if she’s setting up an endowment. But it’s a lot more than just the numbers. Nor is it rushing decisions, especially the ones that are irrevocable, like [certain] trusts. 

There’ll be a timeframe that has passed before you get to Transformation.

How long did it take you?

I was about five or six years into my widowhood before I realized that I was so much more than just “a widow”: I was an independent woman functioning on my own and going forward doing things.