The question of, when is it time to take more control over your personal finances is difficult to answer, and more often difficult to emotionally accept that your roles may be changing. In this transitional period there may not be an outward sign that your spouse needs assistance, but many subtle signs that the task of managing personal finances is becoming overwhelming and possibly neglected. Clues that may suggest that the time to step in has arrived are:
Even though your spouse is not asking you to help manage finances, these signs may be telling you that it is time. This transition can begin with a step as basic as designating a specific receptacle to place the incoming mail so that you may sort through it together to determine next steps.
If the bank is returning checks stamped insufficient funds, confirm that the monthly inflow of cash is adequate to cover the expenses. Consider taking over paying of the bills and balancing bank statements monthly. Utilize electronic bill paying services and automatic payment options for recurring debts.
If you don’t have a current statement of net worth, identifying and summarizing your current assets and debts as you review the monthly statements will provide the clarity that will be necessary to make accurate financial decisions in the future regarding your well-being and the estate. As you are reviewing the statements monthly, list the identified assets and debts under the appropriate categories and summarize the totals.
Initially you may want to help pay the bills by writing the checks then giving your spouse the opportunity to sign the checks. By signing the checks he or she will still feel in control of the finances. After the mail is sorted and the bills are paid, file all forms together with information to be reported on the following year’s tax returns, such as car registration fees, property tax bills and rental property receipts.
To confirm that your consumer debt is being managed properly and not abused, order a free copy of your credit report at: www.annualcreditreports.com.
Review the home, auto and umbrella insurance policies with your spouse to confirm that the coverage is adequate and in place. If changes need to be made on the policies or if the insurance company needs to be notified that your spouse’s drivers’ license has expired, consider assisting your spouse with the task of contacting your agent by having a joint call.
Does your spouse have a safe deposit box or a storage unit? Do you know the location of these receptacles, where the keys are and who has access to the units?
Review the investment portfolio; is the portfolio risk appropriate for your age? Can various accounts with like titling be consolidated into one account? Consolidating various accounts provides the transparency that is necessary to determine the portfolio allocation as well as reduces the number of statements to manage.
Confirm that the required minimum distribution (RMD) is being withdrawn from the appropriate retirement accounts and reported on the tax returns. The IRS penalty is significant when a required minimum distribution is missed. To avoid the chance of missing this mandatory withdrawal and facing penalties, have a joint call with your investment advisor to withdrawal the RMD as an automatic distribution.
Review and confirm that your estate planning documents are signed and current. You may or may not have a trust or several trusts, but should have some basic planning in place such as a will and power of attorneys for both finance and health care. After reviewing the current estate planning documents, store them is an easily accessible but secure location. Contact an estate planning attorney for guidance if these documents are lost, need to be updated, or do not exist.
Review all bank, brokerage statements, and real estate deeds to confirm that the assets are titled appropriately. It is much easier to retitle the assets while your spouse is alive than to face the consequences of an incorrectly titled asset after his or her death.
Are the beneficiaries correct on any life insurance policies, annuities and retirement accounts? It is not uncommon that a beneficiary is listed while no longer is the intended recipient on the contract. Once a death occurs it is too late to make any changes and unfortunately if the beneficiary is not the intended recipient the trust or will does not override this mistake.
Gather the contact information of your spouse’s doctor, accountant, attorney, bank, brokerage firm and financial advisor. At some point in the future you will need this information and appreciate that it is available.
Helping your spouse organize and manage personal finances with dignity and respect will provide them the opportunity to transition through the various stages of aging gracefully, while offering you the peace of mind that their intentions are honored and implemented.
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