The Importance of Communication in Financial Planning for Couples
Every spousal financial relationship is unique. Through the years, couples develop their own systems for handling financial matters. Sometimes it is one partner’s responsibility to manage all finances, sometimes the other’s and sometimes a combination. Whatever the situation, certain information should be shared.
Couples should consider mutual responsibility for and knowledge of:
Retirement plans: Take time to fully acquaint each other with employer retirement benefits. Both partners should have current knowledge of pension plans, 401(k) accounts and IRAs. For a complete picture of expected retirement benefits, become familiar with each other’s Social Security benefits, as well. Understanding retirement benefit information will bring clarify and facilitate retirement planning.
Credit card documents: This one can be scary. Some may prefer to not know how much credit card debt their spouse has accumulated. But it’s wise to know where to find account numbers in case one loses his or her wallet and needs the other to help cancel the card. Also, mutual awareness of credit card debt amounts will help with developing a family’s overall financial plan.
Power of attorney: It is generally a good idea to have power of attorney on any individually owned assets, just in case one becomes ill or otherwise unavailable. Power of attorney can be limited to specific functions for a certain period, such as selling stocks or withdrawing money while traveling. A broad document that authorizes each partner to handle almost any situation in the other’s absence is also a consideration.
Wills, trusts and life insurance: It’s especially important to share information about wills, trusts and life insurance if either has been married before. There could be restrictions on how some assets may be used and beneficiaries left unchanged by mistake. Most important, make sure each partner knows where to find wills and will be able to easily access it if something were to happen.
Health insurance policies: Most insurance companies will cover care administered in the first 24 to 48 hours of a medical emergency, even if the coverage details have not been sorted out. But the situation isn’t as clear with hospital visits that are less urgent. If each partner is covered under a different insurance plan, both should be familiarized with the requirement “hoops” they may have to jump through.
If one spouse had a sudden illness, would the other know which doctor to call first to get an okay for treatment? If not, they risk running up big bills at an out-of-network doctor.
Business loans: If one spouse owns a business or is a partner in a professional firm, both should know about any personally guaranteed loans. It is critical to be aware of liabilities since household assets can be hit if the business can’t repay the loan.
While many don’t necessarily need to know everything about their spouse’s finances, maintaining a working knowledge of the above points can help maintain proper, balanced control over a family’s financial affairs.
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My hubby and I are having a hard time looking for the best way we can save money and at the same time earn from doing it. We are currently looking at stock market and trust funds. Im not sure which one is better.
When my father passed away suddenly, my mother was left with almost no idea of any of the family finances. She didn’t know where insurance policies were kept, how much money was in the bank, how many bills needed to be paid and a host of other issues. We had to work like detectives to figure out how to help her. It would have been much better if they had talked more about their finances with each other and had a plan if one of them passed away.
I think being too personal sometimes trouble you. Your lovingly prepared plan should not be go unnoticed after your death. You must tell your executor or loved one that where they have been kept. It is lil bit awkward but important point.
I absolutely agree and not only in Financial Planning but each and every matter, mutual communication has a vital importance for a couple to lead a peaceful and happy life.