Protect Your Partners Financial Well Being by Bob Lowry
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.
- 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?
- 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?
- 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.
- 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. 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.
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.
By Bob Lowry