What Each Spouse Should Know About Finances

When one partner is in charge, the other can be at risk

In the typical division of labor in many households, one spouse manages the bills and the assets.

This is natural and healthy, financial planners say.

But both spouses should have at least a baseline understanding of the family finances, the experts add—and this seldom seems to be the case.

Just 28% of couples were "completely confident" that either spouse alone was prepared to steer their joint retirement finances, according to a recent study by Fidelity Investments.

Disability, divorce or death can thrust new responsibilities on spouses when they are ill-prepared. But talking about such "what ifs" can stir up uncomfortable questions and issues, so many couples avoid doing so.

"There's a tendency to say, 'Tomorrow, tomorrow, tomorrow,' " says Dorian Mintzer, a retirement-transition coach, speaker and author. Most couples "want to avoid confrontation and don't want to think about their own mortality," she says, even though "talking about it can free you up and help you try to plan what's ahead."

Here is what couples should do so that each partner will be able manage their financial affairs responsibly if they have to.

The best way to start the conversation is to make an inventory of assets, says Christine Palmer Hennigan, a certified divorce financial analyst and representative of Hornor, Townsend & Kent Inc., an investment firm in Horsham, Pa. Knowing what you own, and its value, will help you make informed decisions about how to distribute those assets when confronted with an unplanned transition, she says.

Start the list with financial accounts, including 401(k)s, individual retirement accounts, brokerage and checking accounts. Include where the accounts are held, whose name is on what account, and logins and passwords for any online accounts and assets.

Add insurance policies, indicating where those policies are held, whether the premium has been paid and whom to seek for advice about the policy.

Make a note of the beneficiary listed for each account or policy. Too many newlyweds forget to change the beneficiary of their 401(k) to their spouse from, say, their mother, says Stuart Ritter, a vice president and certified financial planner at T. Rowe Price Group.

In a prominent place on this list should be the couple's emergency fund and how to access it. Both spouses also ought to understand how their partner is compensated, including stock options and other deferred compensation.

Source:  Rachel Rosenthal, Wall Street Journal

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

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