Early last year, one of my best friends passed away. He was also my client. When the time came to discuss his accounts with his widow, I was glad to hear that my old friend had taken my advice and kept his wife informed about their assets. She had a general idea of what they had and some beginning thoughts about what to do with her investments.
For that simple reason, she was one step ahead—my friend had kept her appraised of their financial status. Before writing this article, I wrote to her asking if she’d be comfortable with me publishing her story. She emailed me back with her permission and added, “I’m glad to hear you are writing about this—it is an important subject.”
Smart Division of Labor
In our family, if you want to know about our kids, you might find out more by talking with my wife, Joan. And I would also recommend talking with Joan about cooking, cleaning, and gardening. I’m the go-to guy for cars, cameras, and paying the bills.
We find that most of the couples we advise have one spouse in charge of family finances. Since men on average have a shorter life expectancy than women, most married women can expect to be widows someday. If the spouse that handled the family finances dies first, the surviving spouse will have a much better chance of success when taking over the finances if they have at least a minimal understanding of what their spouse was doing. Where’s the money? Whom do I call? What do I do?
So when a married man or woman asks for advice on investments, we request that both spouses be present for the initial planning meeting.
In addition to making sure that each spouse has a minimal familiarity with where the money is, couples need to make other important decisions. For example, how should they title their accounts?
You probably know that you can name a beneficiary to inherit your IRA or other retirement account. But did you know you can do a similar thing with non-retirement accounts, like savings? You can add a “transfer on death” designation specifying to whom those assets will transfer on your death.
And it might be a good idea to decide together who the beneficiaries are. Or it might be better to move all of your assets into a family trust.
My purpose here is not to recommend either of these structures but rather that both spouses, in consultation with a financial advisor, make these decisions together.
Keep Your Kids in the Loop, Too
However you structure things, it’s also good to keep the next generation informed as well. At a bare minimum, mail and email them a “what’s where” list, and discuss your estate plans with them. My wife’s mother and stepfather went so far as to list the distribution of every valuable in their home. It’s the best way to avoid siblings squabbling over possessions. Communication is the key.
As mentioned above, in our family, I’m the go-to guy about cars. But Joan does have some understanding about them. And I do know a good deal about our kids. If one person in your relationship has primary responsibility for investments, that’s just an efficient division of labor within the couple. But make sure the other spouse has some idea of what’s going on. That way, the surviving spouse will be a step ahead, just like my good friend’s widow.
Hal Masover is a Chartered Retirement Planning Counselor and a registered representative with Financial West Group, member FINRA/SIPC. Securities and advisory services through Financial West Group, member FINRA/SIPC. Comments and questions can be sent to email@example.com.