Left the money worries to your partner? 5 tips you should consider right now

In mid-2013, Gwen’s (name changed for privacy) husband was diagnosed with terminal cancer. Two months later he sadly passed away. Notwithstanding the obvious emotional toll losing her husband has taken on Gwen, she has had to undertake another battle she never expected – taking responsibility for her finances after decades of not having any involvement or knowing exactly what her husband was doing.

For Gwen, the past three years have included having bank accounts frozen and being unable to pay bills, discovering random paperwork related to unknown loans in the bottom of cupboards, trying to work out what shares she owned and how to access them and generally a host of major decisions on issues that she has little idea about. All at a time that she has been grieving the sudden loss of her husband.

It is not uncommon for one partner in a relationship (it is not always the male) to take greater responsibility or control of the money side of things compared to the other partner. This generally means decision-making and paperwork duties lie with one person. This can often be a great idea but it can also ultimately result in significant stress and financial loss for the remaining partner.

If you are in a situation where your partner controls all of your household finances, I have five suggestions you should consider doing right now:

1. Understand what you own (assets) and what you owe (liabilities) 

This also includes understanding what entities (e.g. super fund, trust or companies) that own your assets e.g. term deposits, shares or investment property(s).

2. Understand your sources of income and expense

Income sources often include: interest, rent, dividends, pensions from superannuation, and government benefits. On the expense side, these can be many and varied.

It is also a good idea to know what direct debits are coming out of your bank accounts at regular intervals. It is often a shock to discover a bank account after six months that has had monthly fees dwindle it down for things you do not even need or use.

3. Understand your partner’s strategy and long-term money plan

This can help you in knowing how best to deal with the money yourself one day. It can also be a handy process if your partner, unbeknown to you, was about to take you both towards a financial catastrophe. What do you mean we are going to run out of money in two years? (this has actually happened!).

4. Know how to take control of the finances if you had to

This will vary from person-to-person but will typically involve knowing:

• the user names and passwords to bank account(s), credit cards, loan accounts, and share trading accounts.
• where all the paperwork is and how to deal with new mail.
• where vital documents such as title deeds, Wills and Life Insurance policy details are located.
• whether your bank will freeze your accounts if one person dies.
• The details of any professional advisers (lawyer, accountant, investment manager, financial adviser) that currently assists with your financial affairs.

5. Have a plan of attack before you need it.

At the very least you should know what you would do in the first six to twelve months after the death of your partner. It is much better to decide these things when you have a clear mind, and with the assistance of your partner, then when you are under enormous emotional stress.

If you are going to rely on the assistance of professional advisers, it is always good to engage them in the process before the event. One advantage of this is that it gives you and your partner time to gain a better understanding of how they operate and become comfortable with them.

I know many of our clients take comfort in knowing that the remaining partner will have a team of professionals managing their key investments and providing proactive active no matter what.

If you are the one who controls all of your household finances and you would like to ensure your partner is prepared financially in the event you are no longer around, I encourage you to consider helping your partner undertake the above. This does not mean giving up control but rather helping your loved one prepare for the future.

Part 2 is going to cover common traps for those that are thrust into looking after finances.

Are you in a position to manage the family finances if your partner was to pass away first? Have you been in this situation – what advice would you add for others?