Opinion: Financial planning considerations for couples

Kenny Gott

If one member of a couple has a closer relationship with their financial adviser, could this become a problem if one of them dies? Likewise, if one handles most or all of the finances, and the other has no clue, what will happen if the “bookkeeper” dies or becomes disabled?

Talk about this together now, share information and have a plan in place for a smooth transition in case of tragedy, when life will be plenty upside-down without the added problem of financial disarray.

A lovely couple we’ll call Mr. and Mrs. N engaged with their adviser for help with an investment: the proceeds from the sale of real estate in North Dakota which Mr. N had inherited from his father many years prior, so federal capital gains tax was going to be considerable. They talked with their adviser about strategies to stretch that tax hit over a couple of years, and how to invest in a way that the value would be fairly stable, and available to pay the tax bill the following year.

They worked together on ideas, and near the end of the meeting the adviser asked Mr. N if he had more questions. The adviser then turned to Mrs. N and asked the same thing, and she responded, “I just hope I die first.”

Mrs. N didn’t feel she understood everything well enough. Mr. N handled most of the finances, and she just felt lost.

From then on, the adviser tried to take a little extra time each meeting, addressing one issue at a time, so Mrs. N could catch up, and keep up – so she didn’t have to feel so exposed. The adviser needed to slow down a little and be clearer for all interested parties. And she was certainly an interested party.

In fact, 70% of women change advisers after the death of their spouse, often because they had felt ignored or underinformed within the client/adviser relationship, according to reporting in Investment News. And, in many cases, because their spouse handled the finances and did not create a basic contingency plan for an unexpected transition.

If you and your partner are not 100% comfortable with your adviser, either examine why and fix the problems, or seek someone else who is a better fit. Get started now on organizing and understanding the roles each of you play in your financial life, as well as each member of your financial team.

There should be specific actions taken in case of death or disability, and you should sketch those out now. If you wait until it becomes a reality, it’s too late!

This is about you and your partner knowing your resources and team members: accountant, attorney, investment adviser, financial adviser and insurance agents. Both of you meet every member of the team if you haven’t already. Attend account reviews together. Get a working knowledge of what you own separately and together, and how it’s all protected. For example, insurance for hard assets and a long-term investment strategy that accounts for occasional market downturns. Understand the plan for managing assets to meet basic goals. How would the goals change in the event of death or incapacity of either of you?

An important element of this planning is to know where everything is. As I detailed in a column for Springfield Business Journal last March, put together a binder in a file cabinet as a one-stop shop for contact information for all your advisers, and the locations of important documents like bank accounts, wills/trusts, birth certificates, Social Security cards, etc. List the secure locations of these sensitive documents, but don’t keep the documents themselves where a burglar can find them. Make sure your immediate family or other responsible party knows where to find this binder, because it will be their guide someday. And they will be glad you thought about them, and each other, and made everything not just easier, but better.

In the meantime, talk with your partner to make sure you’re both clear on your financial plan, and comfortable with the professionals you depend on to implement it.

Certified financial planner Kenny Gott is president at Piatchek & Associates and author of the book “Bottom Line Financial Planning.” He can be reached at kgott@pfinancial.com.