January 26, 2018

Protect Your Partner's Financial Well Being


The important subject of preparing yourself or your partner to handle the household's financial responsibilities is a subject worth revisiting. In the last few years of his life my Dad turned over the management of his financial affairs. I also took care of his taxes and interactions with various investment companies. 

I found that he had renewed 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 were among the worst. They had him on the hook for three years. after his death.

My father-in-law, in the last few years of his life, became hooked on 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.


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, 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.


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:
  • 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. Even so, 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.

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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.


24 comments:

  1. Thanks for another great topic, Bob. It precipitated a good discussion here. I was CFO when we ran a business and dealt with the accountant, etc. As such, I’m the de facto family CFO, too. But it’s time for another review of how to get into Quicken, the where and when of bills, etc. We married later in life (2nd marriage for both) and as such each have our own retirement accounts, but otherwise, our finances are pretty simple. But definitely time for me to review the details again in case DH needs to step up to the plate. :-)
    —Hope

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    1. Glad you found it helpful, Hope. A yearly review is probably a good idea. Change the smoke alarm batteries and review the family finances on January 1st....mark it down!

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  2. I certainly recognized the magazine subscriptions years into the future discovery as it was the same with my Mom but we were fortunate that she was hyper-vigilant about potential scams and over payments in other areas. I really should make a list like you have and go over it with my husband and sons just in case.

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    1. Feel free to print out this post and use the list as a starting point. Or, drop me and e-mail and I'd be glad to send you the list. It should be a good starting point for any discussion.

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  3. New reader here. I am a 51 year old woman living alone and I have no kids. In January each year, I write down which banks I use, how much money I have sitting in each account. List the credit cards that I use (only 3 so, no big deal). List the debt that I have to pay down. Then I give this file to my sister. She has a key to my safe where I keep important documents such as deeds to my real estate, passport etc. She also has access to some of my cash that she keeps in a safe deposit box at her bank.

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    1. Congratulations on taking care of business so your sister has what she requires if the need ever arises (many, many years in the future!). Doing what you are doing is an act of love for her, to make a very tough time not so daunting.

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  4. Another issue: If you have grown,single kids,need to review THEIR stuff with them,too! Our grown son did not have a will , a medical power of attorney,or a living will. When we talked about "important things" a couple of years ago, he did get all of those and we have copies.Also,grown single children may have life insurance policies, retirement accounts, etc.. Last year as a family we sat down and reviewed all our $ and insurance policies together,who the beneficiaries are and how to find all the info-- and everyone knows where keys,accounts,etc are. We also had to get copy of our son's passwords to his various online accounts. Everything is locked up in a safe deposit box and all of us have shared what we need to know in the event of accident or death of the other. We actually go as a family to the bank and test our entry to our safe deposit box every year, all 3 of us.It is a "fingerprint" recognitiion system and last year somehow our son's was not working!! This is all not a pleasant topic, but none of us want to lose our hard earned savings or have our $ go to the government! I am computer savvy in ways Ken is not, so I take care of our bills and get online statements,etc.We review all this YEARLY and make sure the info in the safe deposit box is up to date. We all feel better knowing the important issues are taken care of for the future. MY biggest concern is that I do not know how to take care of any house stuff-- the pool,spa,drip system,cars, yard work,etc..--Ken is my handyman and does such a great job! We have divided up our work kind of down old fashioned gender roles because that is what works for us--Though I have friends with homes who have been single a long time, I do not feel I could manage a house on my own and would probably go to a nice park model or even Friendship Village should the need arise,though i absolutely love my home. We just had our yearly meeting and Ken suggests if it would occur, I should wait a full year and get a handyman and not make quick decisions. It's never a good idea to keep one's head in the sand... just take a day or two and have the meetings, reviews the info then put it to rest for the remainder of the year!!Great post and soo important!

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    1. The point about doing some of this review and preparation with grown children is an excellent one. Our married daughter and her husband have this well covered, but our younger daughter probably does not. Your comment makes me think Betty and I should review some of her important material. She travels for a living so, God forbid something happens overseas, we must know where important papers are.

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    2. Don't forget to get their passwords..the younger generation does it all online!!!!!

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  5. I would think access to other important documents like land/home titles. What about dissolution of social media accounts?

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    1. Ah, good point. Shutting down someone else's social media accounts is not easy unless arrangements have been made in advance.

      We store important documents like deed to the home and title for the car, passports, etc, in a safe deposit box that everyone in the family knows about and where the key is.

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  6. Bob,

    An important topic.

    I have a secure, encrypted program for storing passwords, credit card info, etc.. I have entered all of my relevant banking and financial account info and all of my internet passwords (as well as online friends who should be notified of my demise should it occur). I have given the master password to my sister and she stores it in her encrypted data program (and I have hers).

    I had a friend pass away recently. He and his wife had frozen their credit files and she has not been able to find the passwords to "thaw" the files as yet. A nightmare. People should develop a list in keeping with our internet, online era and store it in a secure format or place (even a list in a safe deposit box) and make sure someone trustworthy can get access to the data.

    Rick in Oregon

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    1. The possibility of a frozen credit file that can't be "thawed" is a new concern but a very important one. Without the special PIN to unlock such a freeze, credit becomes a real nightmare.

      Thanks, Rick, a good reminder about that and storing passwords.

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    2. Good tip. We have a credit freeze in progress since all the various breaches of security. I have to find out how to UNFREEZE if I need to!!!

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  7. Okay, well. I can tell you that our system was similar to Rick's. My husband had not an encripted program, but simple a password file on his desk with all of the passwords and user names and account numbers for everything we were involved in. He gave me that info early on in his illness, as I'll be sharing in my "survivor" posts over on the blog.

    the checking accounts and credit cards were not an issue with the fruadulent bills and so on. I can see how that could be in situations where one partner actually did EVERYTHING. I have a knitting pal whose husband is an accountant with his own business and the nature of such is that he pays it all he does it all and in her case she would literally need to know it all.

    It also helps, if additionally to knowing the passwords (and I realize many folks especially younger folks don't do this any more) is to have a joint account with rights of survivorship. Forcing a spouse to wait until docments are opened or until wills are satisfied can be a long and waiting process. Because I was the beneficiarry and the survivor on all of our accounts, access was much easier-which is something to consider.

    The big thing I see missing from the above though, is knowlege, investiment wise, and how to handle those investments post death to your advantage. Had I passed away, my husband would have known about the four percent rule, he would have known to get a financial advisor right away. He would have understood that taking money out to live on beyond the acceptable rate prior to the appropriate age would put him in the position to have the tax man wanting to take much of what he had. I, on the other hand knew any of that. Yes, I would still have had to spend a very large portion of my 600 grand, because I had dependents and no job for the ten years before retirement age, But I would have known how to protect myself. I don't blame my husband for this, his was a very young death and he probably thought I knew more than I did. but I would suggest that if the non financial spouse doesn't have this kind of education, it should be included in the above. I was badly affected in part because of pre-retirement spending, but even so, this is a discussion that needs to be had in my opinion.

    My husband protected me well overall, simply by working for the federal government, leaving me with good health care and a pension. But others may not have that same thing to fall back on and knowing how to handle that money and how to do so immediatlely is a big part of financial education. Obviously in my experience.

    Hopefully I have said this well, I am still sufferering the consequences of my "worse than the flu" cold.

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    1. First, I hope you recover soon, Barb. I will be e-mailing you next week with my request.

      In our case, our major investment accounts are TOD (transfer on death) from me to Betty. She has no IRA or account of her own because she hasn't worked more than part time during our marriage and didn't earn enough to have her own account make sense.

      Upon my demise, she knows to contact our trusted advisor who would guide her through whatever needs to be done to protect our holdings and her future. Basic bill paying and the kind of things listed above she could handle with time. But, maximizing the investments to provide for her would be entrusted to a professional.

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  8. Important if hard-to-face topic; so thanks for bringing it up. Sometimes it helps to bring a trusted third party (in our case, a sibling and a grown child) into the equation if they know what they're doing and are willing to help.

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    1. The best solution is having trusted family member to help the surviving partner. You are lucky, Tom.

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  9. Really good post! We've given access to our oldest daughter so they can see what we're up to. It's all in Dropbox and we all have access to it. Works for us.

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    1. Thanks, Linda. I am glad you can put these thoughts to good use!

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  10. I wonder if mentioning a TRUST is a good idea? I know retirees are probably aware of these options.You don't have to be a billionaire to gain from having assets in a trust. Worth a look if you own properties, businesses, IRA's,etc.

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    1. A trust can make sense for people who have a certain level of wealth. Changes in the tax law make it less important than it once was, but it can be a way to control where some of your resources go upon your death.

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  11. Bob, this is a great topic. Although Rob and I split the expenses and each are proficient in managing bill paying, etc., there are a number of items on your list that we have never discussed or planned for. We should know better than to have our heads in the sand. I lost my first husband at a young age many years ago, and had to go through all the financial steps at a time of grief. Also, Rob’s (long-divorced) ex recently passed away leaving his kids with a very messy situation to sort out. I have no excuse for this lack of planning except that it is a topic that is uncomfortable to think about.

    Jude

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    1. It is not the most comfortable topic i could discuss, but probably one of the most important. As I note, I really think of this as an act of love for a spouse, partner, or family member who will be left to pick up the pieces.

      One thing I just did after this post is set up a system on Google so Betty can shut down my various accounts if I am unable to. And, by leaving her the various passwords for Twitter and Facebook she can shut them down too, if need be.

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