Estate Planning: Cross-Training for Spouses
In every household, different responsibilities are routinely handled by one spouse or the other. This division of labor makes it easier to accomplish all the tasks that are required. Also, we usually try to take over the jobs that we enjoy (or dislike less).
One spouse will always take out the trash or cut the grass. The other will prepare most of the meals or do the gardening. One spouse drops off the kids to daycare, while the other picks the kids up.
The same is true with financial matters. One or the other spouse is usually responsible for all of the bill payments and investing matters. Some people don’t like handling financial matters, while some may have a knack for it. This works well until there is a crisis.
That’s why I recommend cross-training. I’m not suggesting that the jobs be switched, but it is important that both spouses know what is going on financially in the family.
At a minimum each spouse should know who holds the mortgage to the house, approximately how much the mortgage payment is, what the property taxes are and what the monthly utilities are. Additionally, both should know how much is in savings and checking as well as in all of the retirement accounts. Both should know who the accountant is that prepares the annual income tax returns and both should know who the financial advisor is.
This is very important to avoid a catastrophic effect when one person is disabled or dies. I have observed many circumstances where the widow or widower is totally unprepared to handle their own finances alone. He or she has no idea at all as to what the bills are and how they are paid. It is difficult to learn this new task when you are in the middle of a crisis or in shock from a sudden death.
While an estate planning attorney can assist you with the preparation of Durable Power of Attorneys for financial and legal matters, that power will not be effective nor helpful if you have no idea what needs to be paid or where it needs to be paid to.
When you are looking at estate planning and planning for your future needs, remember to do some cross-training. It will make you both ready for whatever the future holds.