Most couples nowadays have assigned the task of paying bills and dealing with finances to one member of the family. Sometimes it’s the husband and sometimes it’s the wife, but rarely is it both spouses. While this may seem convenient, it’s rarely a good idea. Because if a marriage is headed for the rocks, only one person in that relationship has any idea what the family’s finances look like.
For most people, discussing their finances are about as exciting as talking about choosing a nursing home for an aging parent. Death, divorce, illness – these are not fun topics, we get it. But while uncomfortable conversations are often postponed, avoiding this discussion can result in far worse consequences for both of you in the long run.
So while it’s perfectly normal for one partner in a marriage to deal with most of the family’s budgetary details, it’s vitally important for both partners to at least have a working knowledge of their finances. This would include assets, bills, savings, retirement plans and insurances. Although that’s not a complete list, it’s certainly a good start.
Family law attorneys spend considerable time reconstructing family financial information when the need arises. Death, marriage, bankruptcy, divorce, retirement and disability often trigger the need to gather this kind of information. Bear in mind that these are not usually situations that come with much of a warning, so families that have planned for them save considerably on attorney’s fees because their lawyers aren’t spending time doing that work.
Planning ahead, both financially and in other areas, saves money during times of crisis.
Knowing what your assets are, and what they are worth, will go a long way towards helping you make informed choices in the event of unplanned changes. A sudden death in the family, a divorce, or even an unexpected terminal diagnosis can all come out of left field. The more prepared you are, the less time you will have to devote to assembling information under pressure.
One way to get started on the process of financial awareness is to make a list of your assets. Write down all of your financial accounts, including IRAs and 401 k accounts. Also, make sure that both partners have knowledge of important information, like passwords and the account holder’s names. Record the name of the asset or account, the address and account number, the web site and passwords and any other relevant information that would enable each spouse to access the information without the other one.
Be sure to also include your physical assets, like your cars and your house, and any relevant information that may pertain to their ownership or affect their future value. A copy of the deed is helpful but not critical, since every Michigan county keeps them on record. Other assets like airline miles and vacation timeshares should also be noted, since they have financial value but are often not included in financial portfolios.
Join us next time as we continue this discussion on the importance of knowing your family’s finances. It isn’t an exciting topic, we know. But having to add one more unpleasant item to a list of issues during a traumatic time in life is far worse. So as the boy scouts would say: be prepared!