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FINANCIAL SPOUSES & SURVIVOR
PLANNING
I have written on several occasions on how it is quite common for one spouse to
be the designated party to take care of the financial and tax matters. With the
couples I have worked with over the past two plus decades, it is just as often
the wife as the husband; so no stereotypes apply here. Most often, the
financial spouse has that task either because s/he has an aptitude or high
interest in those kinds of matters, or because the other non-financial spouse
can’t stand those kinds of things and somebody needs to step in and take care of
them. In my marriage, it’s both of those things. As a CPA, it’s a natural for
me to handle our family’s finances. However, it’s essential for me to fill this
role because Sherry hates dealing with those things.
There is also a third reason for having this division of duties. There are some
spouses who hoard all of the financial information because they either don’t
trust the other spouse or they want to control them. Typically, this is where
the financial spouse keeps all of the couple’s financial data secret and gives
the other one an allowance. These couples have more serious problems than the
tax and financial matters I am qualified to discuss.
We all know Murphy’s Law; that if something can go wrong, it will. There are
dozens of extensions to this law, such as “at the worst possible time.” While I
have nothing but my own experience working with thousands of clients to base
this on, I think another valid extension of Murphy’s Law would be that the
financial spouse is normally the first to die. I don’t know if this is pure
coincidence or due to the extra stress on those who deal with tax and financial
matters. Over the past few years, there have been several deaths among our
family, friends and clients. In all of them, it is my understanding that the
ones who died were the financial spouses. This makes a bad situation even
worse, because like it or not, there are many tax and financial issues triggered
by a death. There are also a growing number of (for lack of a better term)
vultures who prey on grief stricken widows and widowers. I have seen countless
examples of surviving non-financial spouses accidentally destroying their
finances due to an inadequate understanding of their circumstances, as well as
due to the vultures. I don’t mean to bum anyone out; but this is an
increasingly important matter. None of us is getting any younger, and
statistically speaking, the older we get, the higher our chances of dying. To
address this very important issue, I’ll address it from the perspectives of each
spouse.
For the financial spouse
Chances are that you will die before your spouse does. How would you feel if
you knew that all, or a large part, of the net worth you spent your life
building for your family could be wiped out simply because your spouse wasn’t
armed with the proper information needed to preserve it? It is practically
impossible to convert a non-financial spouse into a financial one while both are
alive. However, to prevent future problems, it is very important to either
inform your spouse as to some of the important tax and financial matters you
have arranged or organize your papers in an easy to locate and follow manner so
that s/he can pick up the pieces when you are gone. We all know of Hillary
Clinton’s use of séances with Eleanor Roosevelt for advice. However, as a
financial advisor, I wouldn’t count on your being able to provide much advice or
guidance to your surviving spouse after you have left this plane. Putting it in
writing, or on video or audio tape would be a much more reliable way to speak
from beyond the grave.
For the non-financial spouse
While you may be experience the “ignorance is bliss” feeling from the fact that
your spouse is taking care of all of your family’s tax & financial duties, that
will probably not last forever. Statistically, odds are that whether you ask
for it or not, you will be forced to step in and deal with those unpleasant
matters. If you haven’t been briefed on the important highlights while your
spouse was alive, or if s/he didn’t leave a well organized road-map for you to
follow, there is a good chance that you could lose everything you have. Use
whatever means you can to get your financial spouse to take care of this.
This brings up the issue of when this should be dealt with. Just as with other
aspects of estate planning, everyone has different ideas of when the appropriate
time is to address those matters. Some estate planning strategies do need to be
started as soon as possible to be most effective. In regard to preparing a
non-financial spouse to assume those duties, all I can say is that it needs to
be done before the financial spouse dies or becomes incapacitated. If you know
when that date will be, plan accordingly. However, unless you or your spouse
are on death row, or have an appointment with Jack Kevorkian, you probably don’t
know exactly when you will be checking out; so you should start now.
PLANNING AHEAD
Above, I
described how important it is for the financial spouses to organize their
information so that their non-financial spouses will be able to take care of
things after they die. I don’t have any official statistics on which spouse is
more likely to die first; but it has been my experience that, more often than
not, it is the financial spouse who goes first. This leaves a mess for the
other spouse who, normally by choice, wasn’t very informed on the couple’s
financial affairs. Besides the sheer stress this puts on the surviving spouse,
it is a well known fact that billions of dollars of assets go unclaimed every
year. It is hard to keep track of all the bank accounts and insurance policies
that could be floating around.
In that article, I
advised using a program such as Quicken to keep the household finances up to
date. While that should record many of the important details, there are a lot
of other things, such as insurance policies and names of people to contact, that
really don’t fit into Quicken. I didn’t have any other special format to
recommend at that time. As luck, and Murphy’s Law, would have it, right after I
had written the above article, I found the absolute perfect vehicle to use for
assembling all of one’s important information. It is a very comprehensive 148
page workbook called “What You Need To Know About Me” produced by Arthur Esbin
in New York. It sells for a mere $20. In fact, I liked it so much that I
purchased two cases of them to sell to people at my seminars so that they could
avoid postage costs. I still have a few left if anyone wants to buy it from
me. Please add an extra $3.85 if you want it mailed to you.
It's been a few years
since I last communicated with Mr. Esbin. At that time he was selling the
books directly for $20 plus postage through his company: Plan Ahead Press, 780
Park Lane, East Meadow, NY, 11554-4509. His phone number is 516-483-8091. He
was offering discounts for large volume purchases. These books would make very
appropriate gifts for the clients of accountants and financial advisors
and are a bit different than the normal calendar and football schedule.
Another very handy resource is The Survivor
Assistance Handbook, a 44 page booklet written by Certified Financial Planner
Mark Colgan detailing all of the little things that a person needs to take care
of after someone close to them passes away. I first learned of this
booklet in
this article on the FoxNews website. I ordered a copy from
Mark's website
and was very impressed with it. Mark's checklists of things to take care
of after a person passes away is the most complete I have seen, even including
such things as returning library books and videos
 that the decedent had out.
At $14.95 plus postage for a single
copy, it's a bargain compared to the potential cost of overlooking even the
smallest detail. Mark is also encouraging bulk sales for gifts with
wholesale prices of $9.95 each in lots of 25 or $7.95 each in lots of 100.
KMK
This page was updated:
Tuesday, December 17, 2002 11:00 AM
Ozarks Time by KMK
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