BMN Blog

Just as it’s common for our families to have “Dr. Mom,” it’s also common for one spouse to serve as the family’s Chief Financial Officer (CFO). The family CFO takes the lead in paying bills, making investment decisions, selecting insurance policies and employee benefits, etc. This division of labor is common because one spouse may have more interest in financial matters, and the set-up works fine - as long as both spouses are physically and mentally healthy.

As you know, our health is not guaranteed, which was the case with a couple I’ll call Pierson and Nancy. Pierson and Nancy were married over 50 years, and Pierson handled all their financial matters until he got sick and subsequently died. Nancy was at a loss as to where to find Pierson’s will or how the power bill as paid. This lack of knowledge about her finances made an already stressful situation worse. Her experience also made me realize how critical it is for families to have regular money talks to make sure financial information is shared. An ounce of prevention is worth a pound of cure.

These money talks can be between husband and wife or between an elderly parent and adult child. We know that, in cases of cognitive impairment, financial skills can be one of the first to decline. It may be helpful to schedule a time to have this conversation, so the other party doesn’t feel like you are springing the topic on him/ her. If you’re talking to your parent, you may also want to reassure mom or dad that you’re asking for information because you want to help, not because you are trying to take over their finances.

Here are five questions to ask during your family financial conversation:

1. How are bills paid?

• If there are multiple bank accounts, what account is used to pay bills and what is the purpose of each account?
• What income, if any, is regularly deposited in the bank account and what bills are automatically drafted?
• If distributions are being made from investment accounts, are those distributions automatically scheduled? Or is a call made to the advisor to request disbursements?
• Are there periodic expenses, like insurance premiums or real estate taxes, paid for via check?

1. Where are important documents kept? The CFO likely has a filing system that works for her, so you may need to make notes about where to find things . The other option is to take over the file system yourself. Some documents may be in paper format and some may be in digital format. You should be able to put your hands on documents including:

• Social Security numbers and benefits statement
• Personal papers like birth certificate, marriage certificate, military discharge papers
• Income tax returns
• Insurance policies for medical, life, long-term care, auto, home and umbrella
• Bank and investment account statements, including IRAs and 401ks
• Statements for any debts, like mortgage, car loan, or personal loan
• Employee benefits, including paystubs and employer provided life insurance
• Beneficiary designations on retirement accounts and life insurance policies
• Real estate deeds, car titles

1. Where is your safe deposit box and who has access to it?
2. Where do you keep a list of usernames and passwords for online accounts? Or, if a password manager, like LastPass or Dashlane is used, what is its master password?
3. When can we meet again to see what information has changed? This money talk is not a one-time event. Your financial and family life will change, and it is important to stay on top of these changes.

Pierson and Nancy did so many things right in their 52 years of marriage, but please don’t follow their example when it comes to communicating about family finances. Schedule your own family financial conversation.

Patti Black, CFP® is a financial planner and a partner with Bridgeworth LLC.