August 15, 2012

Protect Your Partner's Finances

As a natural follow up to my post of the last few days ago, the important subject of preparing yourself or your partner to handle the household's financial responsibilities has been top of mind for me recently. Dad turned over the management of his estate to me a few years ago. I also take care of his taxes and interactions with various investment companies. At least for the time being he likes to pay the monthly bill for his living arrangements and his credit card bill.

Even those bill paying duties will likely switch over to me soon. I have found him renewing magazine subscriptions years into the future. Most companies have figured out if they send a request for a renewal that looks like a bill, even 8-12 months in advance, folks like my dad will pay them. Reader's Digest and  Fortune magazine are among the worst. They have him on the hook for three more years. I think I have convinced Dad to throw away all notices like that, but that may be problematic if he throws away an actual bill.

My father-in-law, in the last few years of his life, became hooked by overseas lotteries. At one point we found he had spent thousands of dollars on Australian and Irish lottery tickets. Of course, the dreaded Publishers Clearing House mailings had him subscribing to things as inappropriate as baby and parenting magazines, under the belief that subscribing would increase his odds of winning.

All of this reminded me that the subject of proper financial oversight is a need that never ends. When a spouse or partner dies the other person has it dumped in his or her lap. When both parents are gone the children have estate and tax issues to handle. Of course, there are people  and organizations who will handle all the details for you. But, that comes with certain risks and costs at a time when someone is quite vulnerable to being taken advantage of.

I wrote about this a few years ago and recently reviewed that post. With my dad's situation fresh in my mind, along with some comments left on recent blog posts I though it would make sense to recycle some of that original post:

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.

If a health problem or an untimely death leaves the survivor suddenly facing a desperate form of on-the-job-training  there is 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.

  • 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.

  • 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?

  • 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.

Recently I was approached by the authors of the book, Cash Under the Mattress that helps someone keep all vital information in one spot. Everything from insurance, to bank accounts, pet information, property titles, relatives, investments, short everything anyone might need after a death.

I received a PDF copy to review and found it to be an excellent tool. I am receiving no compensation and you can certainly gather all the info on your own. But, frankly, I found that keeping everything in one place very wise.  If you are interested it is available through Amazon. Personally, I am going to use it.


  1. A couple of additional thoughts on related planning matters ....

    Check beneficiary designations on life insurance, retirement plans, and the like, to make sure they are consistent with your intentions. I am aware of one case where this review resulted in the discovery that one spouse had inadvertently forgot to change his large 401k beneficiary designation and his former spouse was still listed as the primary beneficiary. Oops!

    Do not name adult children as joint owners of bank accounts for the convenience of giving them authority to assist with handling the account. Instead, put them on the signature card and/or use a power of attorney. Also, do not place their names on the title to your real estate (sometimes done to avoid a probate). Placing them as a joint owner or on the title runs the risk that mom/dad's money may be subject to the claims of the child's creditors in the event the child has financial difficulties (or a divorce).

    1. All good points, Rick. When my mom died I had a few beneficiary changes to make to various instruments held by my dad that were suddenly without one.

  2. A lot of info here to absorb at one time Bob. I will get a kindle copy of the book Cash Under the Mattress. It would also be great if it had a corresponding app to be able to easily gather all this info electronically.

    I went through all of this with Mom after Dad died. She loved to spend money but didn't have a clue on how to manage it. Like your Dad every bill put before her she paid no matter the source. This even included a well-known life insurance company that would send her "bills" to up her coverage.

    1. There really should be protections for the elderly against companies that use misleading billing practices like you relate. Extending magazine subscriptions is an irritant. Adding unneeded insurance is much more serious.

  3. Sigh. You are so right. It's just something that nobody wants to do. And we, I admit, are among the guilty who have been remiss. Not only for the two of us, but for some family members as well. We're getting together for Labor Day. We should really make a point to discuss. And then when we get home, move get our own affairs in order as well.

    1. Let us know if you "labored" with this problem successfully. It is a pain, but an important pain. If you don't believe that, just read the comment below.

  4. Just last week I asked my husband to let me show him
    how to use our on-line banking/bill paying website.

    He refused. He said "If something happens to you, I will just
    open a new bank account." Doesn't that sound terrible!

    I tried to explain that it would be hard enough to think straight
    with my death. That he didn't need to add any unnecessary stress.
    He just ignored me.

    He can do it. But, it will be more than he realizes. If he doesn't
    want the stress now, just think of the mess he is in for. :(

    1. That response says to me (an untrained medical professional) he is in denial and can't face even thinking about life without you. While somewhat romantic it is a very dangerous game to play. Staring a new account doesn't pay all the current bills does it?

      With that refusal to face reality, unless he passes first, he is in for a miserable mess. I guess my only advice is keep trying.

  5. Bob I thought this info was spot on! My Mom just died and she did everything now my Dad is faced learning and coping with the mess.I also learned how different each of us thinks for instance my brother(the saint-he is named Michael)is patient and setting up a system carefully including my Dad on all decisions and making it so my Dad will be the captain soon.When we came to the cable bill he looked at it and was ready to pay it I on the other hand reviewed it asked my Dad what did he want from cable what was important what could he care less about then called cable and reduced bill from 187 per month to 56.Why the drastic change? My Dad never used some of the features and does not want to even try them.My parents had a bundled plan for internet/phone/cable and I found out basic cable, land line for security system and cell phone cost way less than the bundle.It was just a different approach so now we all scrutinize stuff to see if any one of us has a better idea aka less expensive idea for my Dad.It takes a village

    1. Yes, it takes a village! Good example of the need for being on the lookout for expenses that aren't beneficial. A cable company "bundle" is just a way to disguise costs that we usually wouldn't accept if we saw them accurately displayed.


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