There is a saying about relationships that ‘opposites attract’. In my experience, that seems to be true. Financial author and speaker Dave Ramsey sums it up by saying that in every marriage there is a “nerd” and a “free-spirit”. That is certainly true in my marriage and in the vast majority that I have advised, counseled and coached either as clients or students. How that generally plays out is that one spouse will enjoy handling the details of managing personal finances and the other does not. Over time this can cause the “free-spirit” to get out of the personal finance loop while the “nerd” dutifully keeps all the plates spinning. This pattern of one spouse handling the money can work for a lifetime – until it doesn’t.
And while it is unpopular to say today, and perhaps just a reflection of my more traditional client-base, it is my experience that most often the husband is the one who handles the finances – and not always for the better. Regardless of who handles the money it can work for as long as that person is capable and able to keep up with it. However, the most common situation I have seen with aging clients is where husband handles the finances and then either becomes incapacitated or dies first. Statistically men do go first. So if the type-A spouse is the first to go, in addition to dealing with the emotional grief, the non-financial spouse is abruptly tasked with taking over the family finances.
In order to help prepare the non-financial spouse (aka free-spirit) for the time when they may have to handle the personal finances on their own, here is a brief list of some of the more important things that the financial spouse (aka nerd) should be sure their partner has a handle on.
- Where your investments are and how to access funds. Where are all of the accounts housed? Who is the point of contact? And how should they be managed? Most spouses know where the accounts are but knowing how to manage the money and how to turn the investments into income is best learned over time and with experience. Not preparing your spouse to handle the investments often leads to poor investment decisions, or worse.
- How to keep records needed to prepare your tax return(s). The more involved your financial situation the more moving pieces there generally are. Having a simple and organized way to keep, or get, all of the necessary tax information for your tax preparer is critical to avoiding unnecessary stress, cost, and delays.
- How to monitor and maintain bank balances. Believe it or not, there are wealthy people who cannot balance a bank account. Having a system for being able to keep up with cash-flow to include anticipating upcoming needs is the foundation of personal finances. Along with this is knowing how to move funds among accounts and access accounts online is something every spouse should know.
- Understanding of monthly income and expenses. Most retirees get social security and some even get a pension. Knowing how much fixed income is coming into the household and how that will be impacted when one spouse dies is important for both spouses to understand. When one spouse passes, often income goes down and will need to be replaced from savings & investments. Also, knowing how much is being spent each month allows for planning to be sure that the savings and investments will last for both spouse’s lifetimes.
- How your estate plan works and why. Depending on family dynamics, the complexity of your estate, and the cast of characters involved some estate plans necessarily need to be more involved and implement tighter boundaries. This requires administration and generally the input and assistance of others. Knowing how funds will flow, who will be involved, and how that will impact the surviving spouse is better discussed ahead of time so as to avoid surprises.
- Who to call for help. Perhaps most importantly, who will your spouse call if you are no longer here to steward your life’s savings. Who will they trust to help guide them through this most difficult season and beyond? Will it be a nameless and faceless voice on the other end of the phone line? Or perhaps the new recruit down at the bank trying to meet the current quotas but not trained as a financial planner? In a sober moment, I have not met a single loving spouse who would not want a competent, well-trained, and caring advocate to take the reins and shepherd their grieving spouse through the storm. It’s just that most Type-A/financial/nerd spouses don’t want to turn over the reins now – not realizing as many advisors have that now is precisely the time they should. What better time to bring in a capable and competent fiduciary advisor who can not only be up-to-speed on their situation if one spouse passes but also provide valuable input now?
The moral of the story is that many surviving spouses are unprepared to handle their family’s finances. And while not fun (for some), it is a responsibility that must be handled. My experience confirms the prudence of the proverb that says there is wisdom in a multitude of counselors. It is best to find those advisors & counselors before needing them when everyone is thinking rationally and can have the time and luxury of peace of mind to find the right advisors. This is especially true for hard-charging, type-A spouses who can struggle with relinquishing control. If that is you, don’t look at it as giving up control but instead see it as recruiting and working with the team who may one day be your and/or your spouse’s biggest advocates to help implement your plans and protect your life’s savings from opportunists looking for a quick buck. If I can help, please reach out.