Ask the Expert

By Cindy McGhee, CPA/PFS, A&F Financial Advisors, www.affinancialadvisors.com

Is it time for a spousal "financial summit"?

The division of labor among spouses is the source of much marital angst, and beyond the scope of financial advice. But when the division of labor gives one spouse control and sole understanding concerning family financial matters, a summit may be in order.

 

Navigating the tricky waters of power and control over money is not high on the list of date night topics. But communicating before a crisis leaves a spouse financially vulnerable seems worth the effort. Here are some key talking points for your spousal summit.

 

What do we have?

This is where the summit should begin. Surprisingly, some spouses simply do not know. A basic review of the assets, obligations and resources of the family should be the first step.

 

What about beneficiary designations?

Beneficiary designations, not your last will and testament, control the disposition of retirement accounts, IRAs, insurance policies, annuities and other contract property. Make sure these are up to date, and that your spouse understands where these assets will go.

 

How are assets to be distributed?

Discuss how assets will be distributed at death. The previous statement assumes that both spouses’ wills, financial powers of attorney, medical powers and living wills are in place. If they are, review each other’s provisions. If these documents are not in place they should be — soon.

 

If asset distribution is unequal, or if second marriages and children from previous marriages are involved, the discussion is more complicated, but even more necessary. Discuss whether children need to be financially educated for a sizeable future inheritance.

 

What happens to the business?

This is a key question for professionals and small business owners. Make sure your spouse understands the basic mechanics of buy/sell agreements; the proceeds of life insurance policies owned by the business and any continuing income participation payments or similar arrangements.

 

Where are the key documents?

Make sure your spouse knows where wills, financial and medical powers and living wills are located. Financial powers need to be accessible to your named agent. Safe deposit boxes are secure, but may not be an ideal location for medical powers and living wills if a crisis occurs when the bank is closed.

 

Who can I trust?

Make sure your spouse knows your team of trusted advisors. Ask your spouse to join periodic meetings, thus building relationships that could be critical in the future.

 

Planning for an uncertain future is a prudent practice, and a loving one. After this important conversation, take the time for a nice state dinner to cap off your summit.

 

If you would like to talk to a BAM Network Advisor about customized wealth management strategies that can help you reach your financial goals, please call us at (866) 417-2211 or submit our inquiry form by clicking here: Find a BAM Advisor.