Preparing Yourself Financially for Loss

Cathy Schnaubelt
June 20, 2019

It is difficult to consider the possibility that you may someday be separated from your partner because of death, incapacity or divorce. However, preparing for loss now can bring you peace of mind and help ensure that you’re able to make sound financial decisions, no matter your circumstances.

We’ve all heard the saying, “Hope for the best, but prepare for the worst.” Unless you’re a total risk seeker, you may apply this proverb to your daily life. Maybe you wear your seatbelt, own health insurance, or carry an umbrella with you, even when it’s not raining.

Though most of us engage in these types of routine prevention measures without question, we often fail to take the same advice to heart when it comes to financial planning—a sobering reality evidenced by the following statistics:   

  • Only 42% of Americans have completed estate planning documents such as a will or living trust, according to a survey by
  • A separate study published by a team of researchers from the University of Pennsylvania found that even fewer U.S. adults—about one in three—have a living will, healthcare power of attorney or both.
  • A professor from the London School of Economics found that the poverty rate for women following a separation is 27%—nearly triple the rate for separated men.

You may not want to consider the possibility that you and your partner may someday be separated because of death, incapacity or divorce. However, preparing for loss now can bring you peace of mind and help ensure that you’re able to make sound financial decisions, no matter your circumstances.

1. Death

The death of a spouse is a life-altering event that inevitably comes with repercussions that you may not have anticipated. While you may never be fully prepared, it’s critical that your estate planning documents are completed and up-to-date, regardless of your age, health or current stage of life.

You’ll also want to take inventory of your assets, important financial documents, online account details and passwords so that you can easily access them if necessary. Having this information readily available can save you time and anxiety during an emotionally stressful period. Similarly, it can be helpful to understand the estate settlement process and timeline before going through it so you know what to expect and can prepare accordingly.

2. Incapacity

If you have aging parents, you may already have experience dealing with the diminishing capacity of a loved one. Similarly, it’s important for you and your partner to have these conversations early, before one of you is unable to make important decisions on your own.  

To prepare yourself for your partner’s potential decline, it can be helpful to familiarize yourself with their medical history, prescriptions and healthcare providers. In addition, a healthcare proxy will allow you to make medical decisions on their behalf if they’re unable to do so.  Finally, a durable power of attorney is an effective way to make sure your partner’s wishes regarding estate and gift plans, funeral or memorial arrangements and other end-of-life considerations are met.

3. Divorce

Like death and incapacity, sometimes you know divorce is inevitable and have adequate time to prepare. Other times, it can come as a complete surprise. While the process is never easy, there are steps you can take to make sure you’re financially organized.  

The first step you can take is locating all financial records, as well as estate planning documents, prepaid funeral arrangements, long-term care insurance policies and premarital agreements, if applicable. You’ll want to develop an organizational system that works for you in case you need to quickly access and deliver a specific document in a divorce proceeding. Once you’ve organized the necessary documentation, it’s usually helpful to classify your assets as separate property or marital/community property. Familiarizing yourself with this information now—and keeping the list updated over time—can be extremely helpful in the event of divorce or separation.


While it’s not always possible to prepare yourself emotionally for the possibility of loss, you can—and should—prepare yourself financially. Doing so can alleviate a lot of the pressure that typically comes with dealing with unfamiliar financial matters during times of personal and family crisis.

If you’re not currently involved in the planning of your household finances or the decision-making process, getting involved now can help demystify what may seem like an incredible responsibility. You can start by attending scheduled meetings with your family’s wealth advisor and asking plenty of questions. And, if you don’t currently work with a financial advisor, it may be helpful to find one who can help you address these issues and navigate the many complexities associated with loss.