February 7, 2011

You Owe it To the Person You Love

Is your relationship one-sided? Don't get defensive, most are. I don't mean that one of you is always taking and the other always giving. I mean in a way that proves how much you love the other person. You prepare him or her for handling a crucial part of modern life if you are unable to do so: the couple's finances.

It is common in a marriage or a serious relationship between two people that one of them handles all, or certainly a significant part of the financial side of things. Bill paying, taking care of tax returns, handling interactions with investment people, and managing bank accounts are the primary responsibility of one partner. Usually, there is agreement that one person is better suited to handle those duties. He or she probably enjoys it and has developed a system to ensure that what needs to be done is taken care of.

That is fine until a health problem or an untimely death leaves the survivor  suddenly facing a desperate form of on-the-job-training with the potential of a financial crisis. Of course, another option is to find a relative or outside person or business to take over this role. This can be quite expensive. Even worse, the person overseeing the matter may be untrained or even unscrupulous. Very quickly a lifetime of careful planning and investments can disappear.

It is much better for the "financial person" in the relationship to teach the "non-financial person" what must be done before disaster strikes. Taking the time to prepare another is an act of love. Frankly, I believe it is also an obligation, a part of what must be done in a committed relationship.

What are the basics that both partners must know? Here is a list from my own experience. As the financial person in our marriage I am committed to be sure Betty knows enough to avoid any financial pitfalls while she is looking at all her options if I am unable to be there.


Not us !
Banks:
  • Where do we have accounts? 
  • How does she get up-to-date statements?
  • Where is the safety deposit box key?
  • What are the PIN codes for the various ATM cards?
  • Are there minimum deposit levels to maintain to avoid fees?

Credit Cards:
  • What cards to we have?
  • What are their limits and when are payments due?
  • Where does she go on-line to check charges?
  • What should she do if she sees a fraudulent charge?
  • Where are card numbers stored in case a card is lost or stolen?

Bill Paying:  
  • She must know which bank accounts are used to pay which bills,
  • What to do when receiving an e-bills
  • How to set up automatic bill pay
  • How to change payment dates and amounts when needed.
  • Where on-line passwords are stored and how to change them occasionally.
  • Where extra checks are stored 
  • How to see which checks and payments have cleared.

Insurance:
  • Life insurance is held by whom? How much?
  • Car and home owners policies? Who is the agent?
  • Health Insurance information and policies, customer service numbers, limitations or restrictions, keeping premiums current?
Investments:
  • Name, address, and phone number of adviser.
  • How to look at statements on-line for investments and IRA accounts.
  • How to get cash from investments transfered to other accounts to pay bills and provide living expenses.

Taxes: (Welcome to the Jungle!)

This is an area where I do advise her to have a professional handle the state and federal returns. I enjoy doing them (odd, I know) and can make Turbo Tax do what I want. But, there is no reason she needs to be able to take over this area. However, there are things that should be understood: a basic handle on what expenses are deductible, what paperwork to maintain for the tax preparer, and the deadlines for things like quarterly taxes and returns.


This is our list of things we both feel each of us should understand if the need arises. I'd be interested in two things: have you done something like this for your spouse or the person who may have to take over? And, what have I overlooked? Since I still have most of my faculties there is time for me to take care of anything I may have missed.


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15 comments:

  1. the only thing I would add is that all this information is kept in a safe, secure place. My dad had all this sort of information prepared for me and kept it in the bottom on an unlocked filing cabinet along with a copy of birth and marriage certificates.
    A guest in his home took the information and stole his identity, they stole all his savings and ran up bills of over $25,000 in his name. He lose everything and we had to declare bankruptcy. All that 'guest' had to do was make a copy of the information he had prepared for me. It was that simple. So it needs to be kept in a locked, secure place where your spouse only can get it.

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  2. Excellent point, Louise. An unfortunate fact of modern day life is the ease in which someone can make a pure mess of your life simply by having access to a few bits of personal information. Protect your ID like you would any valuable.

    Your story is proof of the dangers. Thanks for sharing.

    On a side note, I hope NSW was spared any damage from the recent cyclone and previous floods that have devastated parts of your country.

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  3. Good list Bob – my husband and I sort of “share” – but there are things on the list that would be good to write down and keep in a safe place. I will look it over and let you know if I think there is anything that I see that could be added – but it looks complete to me.
    Thanks

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  4. Pat,

    Yes, please feel free to let me know if anything should be added. I wouldn't be surprised if there is something I have overlooked and should let my spouse know.

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  5. I really enjoy your Blog even if I'm still a working stiff. But I'm getting ready to leap on the other side and your are helping do it.
    Thanks

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  6. Hi Raymond,

    You are quite welcome. Approaching retirement is easier if we all can share our experiences.

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  7. Bob,
    I have a bad habit. I know what I should do but I never get around to actually doing it. Communicating all this information is important and when it is needed, only I can do it- only when it is needed, I won't be available. Anybody like me take warning. Just do it. Thanks Bob.

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  8. Just do it...while you still can. Exactly, Ralph.

    And, remember to update as needed. I change passwords on a regular basis and often forget to tell my wife I've made the change. So, when she attempts a task it fails and she thinks she has messed up...but it is my fault.

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  9. Replace she with he and you have our relationship four years ago. I did ALL of the banking, organizing, taxes, investments because he was working so many hours in the military. When he retired, he just didn't bother ---since we were doing so well. When he retired for good- he took interest. Now it is a shared responsibility :>)

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  10. Hi Janette,

    As Pat noted above, she and her husband share duties, just like you and your spouse. Having both partners involved is a good idea for two reasons: it spreads the responsibilities more fairly, and both are probably aware enough of what is needed that picking up the slack is much easier.

    If one partner really pays little attention except to learn the basics it will still be quite trying for him or her when the need arises.

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  11. Hi Bob.

    Great list. It's probably implied, but estate plans are very important, regardless of whether there is a taxable estate (power of attorney, power of attorney for health care, and will/trust).

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  12. Very true, Rick. A will or some legal document to keep things from being controlled by a probate judge is a necessity. It should be reviewed and updated on a regular basis.

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  13. Bob,

    I am totally hopeless when it comes to dealing with money. But the planets are shifting in the sky, and I'm going to give myself my own personal MBA program in finance in the next year or so. You've given me the perfect start. Thanks so much.

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  14. Sandra,

    Isn't it exciting when we tackle something new and difficult? We recognize an area that needs improvement and develop a plan to deal with it. Whether it is finance, or relationships, or being well within ourselves (!) all of us have a part of our life than could use an MBA level education.

    Best of luck on your journey. I sense a post or two on your blog about the process.

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  15. You are so right on this topic: you owe it to the person you love and you owe it to yourself. As a lawyer, even though I do not practice in the family law arena, I get calls for help when disaster strikes. In the last year I've had two widows call because they had no idea of bank accounts and other basic financial information when their husbands died. Another friend was going through a nasty divorce [aren't they all], and needed to understand the employee stock options her husband held. If these friends had come to know and understand domestic financial information in advance, dealing with stressful issues like death and divorce would have been much less stressful.

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