It’s not uncommon for couples to divide household responsibilities based on each person’s time, talent and level of interest in the various aspects of managing a household.
Unfortunately, when it comes to finances, this division of labor can leave a surviving partner unprepared to manage alone.
Thinking about our own mortality may be difficult — particularly for those who are young and healthy. However, preparing for it is one of the most important ways we can demonstrate how much we care about those we love.
If you are the person who handles all of the family finances, there are five key things you can do now to ensure your partner will be financially prepared to manage alone.
- Get organized. If you haven’t done so already, prepare a list of all your financial accounts, insurance contracts and legal documents. Make a note of current balances and how things are titled. Make sure your partner knows how to access each of your accounts and important documents. Ideally, this list should be updated any time you add or close an account and reviewed with your partner at least one time each year.
- Review your estate plans. It is unfortunate that many people never get around to writing a will or appointing agents who could act on their behalf in the event of an unexpected illness or accident. If you don’t already have a Last Will & Testament or Power of Attorney, make it a priority to meet with an attorney who specializes in this area of the law. The attorney can help you prepare the necessary documents and can assist in settling your estate in the event of your death.
- Create a cash-flow projection. What if you or your partner should become disabled or die tomorrow? Do you know how much money would be available to support the ongoing expenses of the household? Creating a cash flow model of expected income and expenses can help you identify a potential shortfall and decide what actions may be necessary to close the gap.
- Educate your partner. If you are making all the investment decisions and monitoring the family budget, your partner may be overwhelmed by the prospect of having to learn everything all at once. Spend time showing your partner how you are planning for the future. Discuss your philosophy for managing your money and ask for your partner’s input when making investment decisions. Although he or she may never develop the same interest in reading the financial pages or listening to the nightly business news that you do, having some exposure to this area of your life together will provide a touchstone should the unexpected happen.
- Select a fiduciary to work with you. Your partner may never be willing or able to do all that is necessary to manage the family finances. Consider hiring a professional who can assist you in preparing a comprehensive financial plan that addresses contingencies for an untimely death or disability. Take the time to select a fiduciary who shares your investment philosophy and will put your interests first when giving advice and delivering service.
Like buying insurance, wearing helmets or fastening our seat belts, we make survivorship plans in the hope that we’ll never need them. However, because we don’t know what the future holds, our best response is to get ready in case the unexpected does happen.
Helping your loved ones to be financially prepared to manage without you is one of the best ways to show your love.