06 Oct Financial Advice After Losing a Husband: How We Helped One Widow Take Control of Her Finances
Losing a husband or wife can change almost every part of life.
Losing a husband or wife can change almost every part of life. Alongside the emotional impact, there can suddenly be pensions, investments, savings, property, tax and paperwork to deal with – sometimes for the first time. This is a situation we’ve encountered several times recently.
One client came to us after losing her husband the previous year. Throughout their marriage, he had largely looked after their finances and dealt with their financial adviser. Suddenly, all of those decisions were hers.
She had spent months reading, researching and trying to understand everything. By the time we met her, she had actually become remarkably knowledgeable about her financial position. But she didn’t want to become her own financial planner. She wanted someone she could trust to help her make sense of everything – and work out what all of this money was actually there to do.
She had learned a lot. But she still didn't have a clear plan
Our client had pensions and ISAs in her own name, alongside pensions she was due to inherit from her late husband. There was also an overseas property being sold, which would provide another substantial amount of cash.
One of her biggest concerns was her late husband’s pensions. An existing trust arrangement had previously been established and she believed the pension benefits might have to be paid into it. We couldn’t know precisely what had originally been discussed between her husband and their previous adviser. The trust may, for example, have formed part of longer-term estate or inheritance-tax planning.
But there was a more important question to answer now: What did she actually need the money to do?
Her answer wasn’t complicated. She wanted to maintain her standard of living, spend time with her children and grandchildren, enjoy holidays with family and friends, help her children where she could and, above all, not have to worry about money.
Her children were supportive of that too. Their priority wasn’t preserving as much as possible for their eventual inheritance. They wanted their mum to be financially secure and enjoy the money she and their dad had accumulated. So before discussing products, investments or transfers, we started there.
Before making any recommendations, we needed to understand what she already had
When somebody has several pensions and investments, our first job is usually to get what we sometimes call a ‘lay of the land.’ With our client’s authority, we contacted the various providers and gathered detailed information about each arrangement.
We looked at the values, how much was already in drawdown, where the money was invested, what was being held in cash, the charges being paid and what options were available within each existing plan. We also considered the tax treatment of the different pots and whether there were restrictions or penalties if anything were changed.
One thing the exercise identified was that a significant proportion of one of her late husband’s pensions was sitting in cash rather than invested. It wasn’t immediately clear why, and one of her children had independently noticed the same thing. Rather than making assumptions, we simply included it in the overall picture we needed to understand.
We then summarised everything so that instead of having a collection of different policies and pieces of paperwork, our client could see much more clearly what she had and what each pot of money could potentially do for her.
Did her late husband's pension have to go into the trust?
This was one of the questions causing her the most concern. After establishing the position, we confirmed that the pension benefits did not have to be paid into the existing estate-planning trust.
There was another option available. The inherited pension benefits could instead be placed into an appropriate beneficiary drawdown arrangement for her. That distinction was particularly important in this case because her husband had died before age 75. Subject to the relevant pension death-benefit rules being satisfied, inherited defined contribution pension benefits following a death before age 75 can potentially be drawn without Income Tax.
That gave our client something she particularly valued: flexibility.
She didn’t have to decide immediately how much of the pension she would ultimately need. The money could remain within the pension arrangement and she could draw on it as her circumstances developed.
The taxation of inherited pensions depends on individual circumstances, including the type of pension, the age of the person when they died and when and how benefits are designated or paid. The rules should therefore be checked for each individual case.
Could she afford the life she wanted?
Having organised what she owned, we could move on to the much more interesting question.
Was it enough?
We used cash-flow forecasting to bring together her pensions, investments, savings and the expected proceeds from the overseas property sale. We then considered her anticipated expenditure and the lifestyle she wanted to maintain.
Cash-flow forecasting isn’t a prediction of exactly what will happen. It relies on assumptions about matters such as future expenditure, inflation and investment returns. But it can help turn a collection of financial products into something much more meaningful:
What might this money allow me to do?
The forecast indicated that she could maintain the level of spending we’d discussed and also make a significant gift she wanted to make to one of her children. That led us to another important planning decision.
She wanted to help her child. But which pot should the money come from?
Our client had previously helped another of her children by withdrawing money from one of her own pensions. That withdrawal had resulted in a significant Income Tax bill.
She now wanted to make a similar gift to another child and initially considered doing the same thing again. Rather than simply arranging another pension withdrawal, we looked at her whole financial position. By this point, the overseas property was being sold and cash proceeds were expected. Our cash-flow work suggested she could afford to make the gift, so the question wasn’t whether she should help her child.
It was where the money should come from.
Using some of the available cash from the property proceeds meant she didn’t need to create an unnecessary taxable withdrawal from her own pension simply to make the gift. There could, of course, be separate tax consequences arising from the disposal of an overseas property. We therefore introduced her to an accountant we trust who specialises in tax to advise her on that part of the transaction.
Sometimes good financial planning isn’t about finding a new investment. It’s about understanding which money to use, when to use it and what to leave alone.
Sometimes the simplest explanation is the most useful
During one of our meetings, we drew the plan out on a piece of paper. There were different pots for different purposes. Some of the property proceeds could be used for the gift to her child. We wanted to retain readily accessible money to cover approximately two years of her anticipated expenditure.
We could then consider how the remaining money might be invested for the longer term and make use of available tax allowances, such as ISAs, where appropriate. The inherited pension could remain available for her future needs rather than automatically being directed into the existing trust arrangement. It wasn’t a complicated diagram. But that was rather the point.
She could see what money was for now, what was for later and how the different pieces fitted together.
Could we make everything easier to manage too?
Once we’d agreed the financial plan, we also considered the practical side of managing it. Our client had accumulated different pensions, ISAs and investments over time. Following our advice, we were able to bring the appropriate arrangements together on one platform.
She can now log into an app and see her pensions, ISAs and other investments together rather than trying to keep track of numerous separate arrangements. Consolidating investments isn’t automatically the right answer. Existing plans can contain valuable guarantees, benefits, different charges or other features that could be lost on transfer, which is why we reviewed each arrangement before making recommendations.
For this client, however, bringing the appropriate investments together made her finances considerably easier to see and understand. And because we’d retained sufficient accessible cash for her expected shorter-term spending, she wasn’t expecting to need to draw immediately from her longer-term investments. Those investments therefore have the opportunity to remain invested for longer, although investment values can fall as well as rise and growth is never guaranteed.
The biggest change wasn't really about pensions
When we first met, our client had spent months trying to understand arrangements her husband had previously dealt with. She had done an impressive amount of research herself.
What she needed wasn’t another lesson in pensions and investments.
She needed somebody to listen, understand what mattered to her and help turn everything she’d inherited and accumulated into a plan for her life.
Over the months we’ve worked together, she’s been away several times enjoying holidays and spending time with the people important to her. We’ve continued to call her with updates as different parts of the plan have progressed. For her, knowing somebody is keeping an eye on things and will tell her when something needs her attention has been reassuring. She doesn’t want to spend her retirement worrying about money.
She wants to know that it’s being looked after.
Financial planning doesn't finish when everything has been transferred
We now have annual financial-planning meetings arranged with her. We’ll review her investments and attitude to investment risk, update our understanding of her savings and look at what she’s actually been spending. We’ll then update her cash-flow forecast to see how her position projects forward and whether anything needs to change.
She also knows she doesn’t have to wait until the annual meeting. If she’s thinking about a significant purchase, wants to help one of her children or simply wants to understand whether she can afford something, she can get in touch and talk it through. And if something within her portfolio needs attention between meetings, we’ll contact her.
The plan can change as her life changes.
Have you been left to manage the finances after losing your husband or wife?
Dealing with money after a bereavement can feel particularly difficult when your husband or wife previously handled most of the household finances. You might suddenly find yourself trying to understand pensions, investments, ISAs, trusts, property and tax – at the same time as dealing with everything else that follows losing somebody.
You don’t necessarily need to become an expert in all of it. A good starting point can simply be establishing:
- what you have;
- what options are available;
- what you need your money to provide;
- what matters to you and your family; and
- whether your existing arrangements still support those priorities.
From there, you can start building a financial plan around your life now, rather than simply continuing arrangements that were established in the past.
Would you like someone to help you make sense of it all?
We’ve helped a number of people who have found themselves responsible for their finances following the death of their husband or wife. Sometimes we’re introduced by a family member. In other cases, as with this client, we’re introduced by a solicitor or another professional who is already helping with the estate.
Our first conversation isn’t about moving your pensions or investments.
It’s about understanding what’s happened, what you have and what you need your money to do for you now.
If you’d like to have that conversation, you can call Macon Financial Planning on 01270 250900, request a callback or arrange an initial meeting.
This case study is based on a real Macon Financial Planning client. Certain details have been changed or omitted to protect their identity. This article is for general information only and does not constitute personal financial, investment or tax advice. Pension, investment and tax treatment depends on individual circumstances and may change in the future.
The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.
A pension is a long-term investment the fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.
An ISA is a medium to long term investment, which aims to increase the value of the money you invest for growth or income or both.
The value of your investments and any income from them can fall as well as rise. You may not get back the amount you invested.
Approved by 2plan wealth management Ltd on 21/09/2026
