July 1, 2019

Financial Basics: 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.

Does any of this apply to a single person? Absolutely. You may not be living as part of a couple, but someone, at some point, will have the responsibility of managing what financial pieces of your life need to be dealt with. The suggestions in this post are just as appropriate for a single retiree to review with the person likely to be called upon when you are unable to make important decisions. Leaving it all to a financial institution, the courts, or a lawyer is not advisable.




OK, so what are the basics that both partners (or a single person and a confidant) 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?
  • 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?
  • How to unlock credit freezes on three major bureaus.

Bill Paying:  
  • She must know which bank accounts are used to pay which bills
  • What to do when receiving an e-bill
  • 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 homeowners 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 transferred to other accounts to pay bills and provide living expenses.
  • How to get new checks printed under your name 

Taxes: 

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.

There are things that should be understood regardless: 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. But, with tax rules and regulations changing with the political climate, a professional should be part of the team.


This is the 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? If you are single, what planning for the future have you completed?  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.


I've never done this before

My final, parting, comment: Don't wait "until tomorrow." None of us are guaranteed even that much.

34 comments:

  1. Absolutely love this article. This is one of the best in your financials that I have read. Good work!
    In my short time on the earth, the people most destroyed by lack of this information tend to be people married about ten years or my single friends in middle age who end up in the hospital for a long time. Do you think you could find a different first picture? When I share it- it looks like information for old people (and my group doesn't see themselves as old).

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  2. Excellent article! Eleven years ago, I asked my better half to put together a 'Survivors manual' for couples who lose their significant other. I requested that it include the financial map, the household map, automobile map, etc. to direct all those who don't handle any those duties. Much appreciated Bob! I think it's one of your best articles.

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    1. Thank you for the kind words. The "survivor's manual" is an excellent idea.

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  3. I really wish Deb had an interest in the investment part of our lives, but she has zero. She says she'll depend upon our daughter to sort it out, but that is a selfish view in my opinion, since Jess may or may not have a large amount of time to figure it out. I have all important files in one place so at least she will know where everything stands, but the ability to keep it going will be non-existent, and I do not want her being taken to the proverbial cleaners by an "advisor".

    What I will probably do one of these days is put a cheat sheet together such as you mentioned that will help in some areas that just having all the important info in files will not. I will likely uncomplicate our financial lives somewhat by getting virtually everything into ETFs and mutual funds so that she does not have to deal with individual stocks. Outside of that there is not much you can do if someone professes no interest in the topic.

    She has always fallen back on the argument that since her health is not as good as mine, that she will go first. A foolish argument but it is her argument and she is sticking to it. I wish everyone luck who might be in the same position.

    An important topic that you did a great job highlighting, Bob.

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    1. You have identified one of the problems Chuck: a refusal to face the reality of what may happen. I am sure Betty will turn to one or both of our daughters if I go first. But, even they would not know how to start if things like passwords, credit lock information, contact numbers and such were not readily available.

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  4. Make sure the spouse has established credit singularly in their own name. Credit worthiness will not transfer form one spouse to the other following death.

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    1. That is a very important distinction. In fact, I just Googled it to confirm what a serious problem this can be. THe major problem is the "authorized" user of an account can have the card shut off if the "account owner" dies.

      This is something I will have to check with the issuers of at least one of our cards to be sure it is set up as a joint account.

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    2. As I posted my wife isn't very interested in financial matters though I have done my best. One thing I always made sure of is that she has her own credit card in her name only AND that she uses it from time to time. Our main credit card is in my name with her as a secondary user. This helps for consolidating points for trips or whatever but as Bob says if I were to die then it's very likely they'll be shut off as soon as the card issuer finds out.

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  5. My wife doesn't have a lot of interest in financial things. I always felt I was letting her down a little by not keeping her more involved but she really wasn't interested. Even though my wife has never done an on-line banking transaction in her life she can do or knows how to find all the information in your Financial Basics list. Perhaps I haven't done such a bad job after all. Thanks for this Bob.

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    1. You can lead a horse to water, but.....We can only do what we can do in trying to lessen the financial mess after a death.

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  6. Good article. There are many other aspects of daily life that each of us needs to be sure our spouses or significant others are educated on. Many years ago, when our children were very young, I worked with my wife to be sure she knew how to deal with automotive repairs, purchases, insurance, home repair contractors, finances, etc etc. At some point in our marriage, each of us has held the primary responsibility for most of these areas. I think the one that I need to focus on now is the investment portion. I have had the lead role in that area of our life for our entire marriage. I have had her involved in most all meetings with our financial advisers so she kind of understands what we have invested and with who, but I do not believe that she grasps the need for her involvement, in partnership with our advisers, in determining which investments and types we want to leverage. Thanks for the reminder!

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    1. You are welcome. Betty has met our advisor but that was several years ago. It is a good idea to have her in a face-to-face meeting at least occasionally. Thank you for your reminder.

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  7. I have always handled all our finances except investments and have now dived into that as well. I find it fascinating. We have moved out of individual stocks as Chuck mentioned in his comment. I am checking everything and putting together a manual for our family. I have just begun but so far have found paper I bonds that can be changed to electronic and an I Bond with no beneficiary. Had lots of old investment paper work that does not need to be saved and would only confuse our kids. Also realized that our credit cards have my husband as primary and me as authorized user so I would immediately not be able to use them upon his death. It is a bigger task than I realized to make the manual but must admit I am enjoying the process. I have a book called When Someone Dies: The Practical Guide to the Logistics of Death by Scott Taylor Smith which is very helpful. I think AARP also puts out a guide. Good post, Bob, with lots of helpful suggestions.

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    1. We have what we call our "Red Book" that contains the basic contact info along with a list of the passwords. But, Betty and I must do a better job of showing her how to pay bills and do other basic online stuff.

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  8. Knowing something about finance today is as important today as knowing about farming a hundred years ago . . . you need it to survive. Btw, excellent list.

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    1. Nice analogy, and I am sure you are right. Financial literacy is really crucial to moving forward after a death or incapacitation.

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  9. Re: Credit Cards
    You should check with the credit card company to verify who is the account holder and who is an authorized user. Of our 3 credit cards only one is held jointly, the others are in my husband's name. That means if he passes, they will be cancelled.

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    1. AS soon as I am done answering these comments, that is first on my list for the rest of this afternoon.

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    2. OK...update. It is not possible anymore to take a credit card that has been issued in one person's name and make that into a joint account. An authorized user will lose access when the primary account holder dies.

      The only options are to apply for a new card jointly with a company that will do that (Citibank will not), or have the spouse or partner apply for his or her own card and use it enough to keep it valid.

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  10. Add to the list - email accounts + passwords.
    And under insurance - Long Term care policies. And policy coverage provided by employer.
    Utility companies (and perhaps others) - allow you to designate someone to be notified if payments are not made to prevent services from being cancelled for nonpayment. Make sure you have set up that backup.
    Auto-pay - what accounts are already set up on autopay, the day of month, full pay, or partial payment?
    Beneficiaries - update, and does the trust need to be listed as beneficiary rather than people?

    As a single person, I have found an estate attorney (team) who is local + has updated my trust documents. She also provided a list of fiduciaries who will step in to manage day-to-day finances when the need arises as well as assist with nursing/health arrangements. I interviewed fiduciaries and selected one plus a backup.
    My criteria for all advisors is that they are Not sole practitioners, but rather part of a team so they have backup as well. A sole practitioner can be traveling when you + family need them most. Also - is your advisor close to retirement age? What is succession plan?
    I'm still working to find a financial planner I am comfortable with - many are single practitioners without backup (I want a team type so there is backup). CPA is in place. I still have things to pull together - password lists, and access to Quicken on my computer (the credit card and account lists live there).
    Things constantly change though. My uncle passed away + I'm in process of receiving more funds. That needs to be documented.

    I'd also suggest a 'balance sheet' dated with list of balances for reference, perhaps once a year - especially for those with spouses or family who aren't 'interested'.

    Uncle developed dementia in last 3 years or so, and I had to wade in to learn and protect his finances.
    It was a battle to get him to do his legal docs (will, health care directive, etc). He didn't care because he was 'gone'. But these became so important when he had heart attack.

    If a spouse is disinterested, be sure to include or discuss with another trusted family member so there is backup. or have a fiduciary lined up to step in if family is not to be burdened. (remember that your time of need may coincide with family member's medical emergency or in-law situation. Your family member may be overwhelmed, getting hit from all sides)

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    1. What an excellent recap. You have covered so many important points.

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  11. PASSWORDS! Be sure your spouse/significant others, adult cildren, have access to all your passwords!! I might add, if you have adult children who may be single, you need THEIR passwords. We are our son's beneficiary.He has savings,inventment accounts, etc.. In all financial matters, it's important for lots of open communication and a plan. If you do not want to share passwords openly, at least have a list in a safe deposit box somewhere that your loved ones can access if you pass or become incapacitated. Grown children also need powers of attorney and living wills!

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    1. We have the power of attorney, living wills, health directives, and regular wills all up to date and copies to each child. Passwords are stored where they can be accessed.

      I hadn't thought about adult children passwords, but that is a good point.

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  12. This was an excellent topic for a post, Bob, and you covered it well. Great comments, too, from the community.

    I have a vivid memory from my childhood of a neighbor friend sitting with my mother at our kitchen table, sobbing with her checkbook in her hand. Her husband died suddenly and he handled all the finances. Mom's friend came to her for help because she had never written a check before. I don't remember how old I was at the time, but that stuck with me, and I made sure that I always knew my way around finances.

    Throughout our marriage, I've handled our finances and investments. Alan doesn't have the interest or the inclination and we both agreed that I'm better suited. (Interestingly, once we acquired rental property, we agreed that he was the one better able to handle the business end of that since he had already retired - and it has worked out just fine.) I keep a list of assets that includes life insurance policies, vehicles, savings & checking accounts, loans, retirement investments and rental properties which I update quarterly. Either one of us could pick it up and know exactly what we were dealing with. We also keep an Excel spreadsheet of email and online accounts and passwords that is updated regularly and kept with our wills so that our executor can see at a glance what our online activities consist of. That spreadsheet also includes passwords for our home computer system, router, etc. so that all of our documents can be accessed if needed. Beyond that, Alan and I periodically pay the bills together so that he keeps up with current procedures, and we discuss changes to our investments together before I make any moves, so that we're both in agreement.

    For anyone looking for guidance on getting their life in order to make it easier for others, Nolo Press publishes a book called "Get it Together: Organize Your Records So Your Family Won't Have To." It's pretty much a step by step guide that results in a very thorough job. It can be found both new and used on Amazon and, I'm sure, other places as well.

    If you have a spouse who is just not interested or capable, remember they don't need to know how to do everything, they just need to know where to find trustworthy help to do it. Be sure you keep contact information for your accountant, attorney, broker, banker, financial adviser, insurance rep, etc. both handy and current.

    And consider paring down your records to necessities while you are still physically and mentally capable of doing it. Several years ago, when I executed my aunt's will, I found (among other things) original pay stubs dating back to the 1940's. That winter, we burned a lot more than wood in our stove.

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    1. The story of the neighbor friend is the situation I believe it is our responsibility to keep from happening. As you note, even if complete knowledge isn't passed on, having things organized, with a "calling tree" of people, eliminates some of the heartache and real risk of financial meltdown.

      I have purchased books from Nolo Press before. The ones I am familiar with are wonderful: easy to understand and complete in their coverage of the subject.

      Parking down old paper records or financial stuff well past its "needed to keep" date is an excellent suggestion. I'm pretty sure I have a box in the attic with check records and bills from the early 2000s. Why?

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  13. While I agree that both spouses should be familiar with the financial situation I disagree about it being my responsibility to teach my spouse.

    I think instead that it is his responsibility to learn how to take over the financial responsibility if I can no longer do it, either through death or illness.

    I think it's something all adults need to be capable of, just like laundry, cooking and minor home repairs.

    It's just part of being an adult and I won't take on the responsibility of teaching another adult how to do things - I will gladly help them learn though.

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    1. I appreciate and understand your position, Mary.

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  14. Bob I should clarify that we have a simple financial situation. Pensions and SS and pay out only 14 total bills (monthly, bi-monthly, bi-annually or annually). There is a shared Reminders list that alerts us both when the bill is to be paid and how it is paid. All logins and passwords are written down including social media and email accounts.

    The files have been cleaned out and only the necessary paperwork kept and arranged in labeled notebooks in a fireproof file. I'm not sure what else I can do to motivate him to learn. There are relatives that will help him if needed, which is a comfort to me.

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  15. Bob, Thanks for that list. I'm guilty of being one of those self-sufficient singles who hasn't prepared someone else to take care of financial stuff if I'm not able.

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    1. Glad this post served as sort of a wake-up call. Have a great 4th, Jean.

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  16. I've put the basics in place for my kids to handle things when I'm gone, but my intention is to take my preparation to the next level to make it even easier. Your list is VERY helpful. Thank you.

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