In many families, one partner takes a more active role in handling the finances than the other. Often, this division of labor stems from fear, time pressure or lack of interest.
Regardless of the root cause, having one spouse exclusively handling family finances can put the other partner in a difficult position in a time of crisis. What if one person handles all the finances, and he or she passes away?
Sharing Financial Management
A study by The Hartford Insurance Company and the MITAge Lab found that 36 percent of couples interviewed reported that one spouse is the dominant financial manager. According to a recent UBS report, 56 percent of married women leave investment decisions to their husbands. Among millennials, an estimated 61 percent of married women leave financial decisions to their husbands.
Having the investment knowledge and financial information siloed with just one spouse can be especially problematic because wives are more likely to outlive their husbands. The worst-case scenario is a surviving spouse who doesn’t know what assets they have or how to access them. He or she may not understand what’s important and how cash flow is derived. The surviving spouse may not have a relationship with the professional advisory team nor a deep understanding of the family assets, accounts and guiding financial values.
It is never too late to take a more active role in the family’s finances or to guide the other spouse into taking a more active role. Not doing so can lead to challenging times for the surviving partner. These difficulties can compound on each other with lapsed mortgage payments, cancelled credit cards and other unexpected financial changes.
Steps to Take to Mitigate Risk
Fortunately, couples can take concrete steps now to mitigate the risks of this scenario and to ensure continuity if the unfortunate happens. You can reduce the financial and emotional impact by being informed, strategic and prepared.
Here are a few steps to take immediately to help make the road ahead smoother:
Do you need help getting your financial affairs organized or planning for the future? We’re here to help. Please reach out to us to get started.