What does your spouse know about finances?
As you visit with family and friends you usually find out that one spouse manages the bills and assets. My house is no different. But both spouses need baseline understanding of the family’s fineness. And, only 28% of couples were “completely” confident that either spouse alone was prepared to steer their joint retirement finances.
A healthy approach when you first marry is to sit down together, open the bills, and pay them each month together.
As we know, things happen: Disability, Divorce or Death can place new responsibilities on spouses – even when they are unprepared. The result can range from difficult to disastrous. I heard about a story of a women who had never written a check, or driven a car in fifty-plus years of marriage, and had many struggles when she was widowed. These situations are out there and do happen.
Considering the “what-ifs” can open uncomfortable questions for couples who are not accustomed to sharing financial information. We think it can wait until tomorrow, but talking about these issues helps to plan ahead – and prevent those difficult or disastrous results.
A key item of information to share is an inventory of assets. This includes the following items and more:
1. Retirement accounts, checking accounts, whose name is on what account and remember to share the log-ins and passwords for the online assets;
2. Insurance policies and their status and the beneficiary for each account;
3. Where the emergency fund is located and how to access it;
4. Each partner should understand both partners’ current and future income sources, including stock options and deferred compensation.
Other assets include: House, car, boat, airline miles, hotel points and vacation timeshares. There may be a collection that is valuable over time. (Example: a relative collected coins all over the world and when he died suddenly, his spouse did not have a clue of the value of the collection.)
Create a list in the order the assets should be tapped either in retirement or in case of emergency, with an eye toward maximizing the asset’s value and avoiding taxes or penalties for early withdrawal. Put the list in a safe place after you have discussed it with your spouse.
Reach Karen Slunecka at 605-626-2870 or firstname.lastname@example.org.