It’s quite common for one spouse to assume the primary responsibility for managing household finances.
Naturally, if one partner possesses a natural inclination or proficiency in financial matters, it’s logical for them to take charge.
While it may seem convenient for one spouse to handle these affairs, it remains crucial for the other spouse to remain involved and informed.
After all, the responsibility to oversee your own money can never be completely delegated to someone else.
Know what you are signing!
While we inherently trust our spouses, open communication serves as the foundation of any successful relationship.
It’s crucial to understand the financial and legal implications of any document before signing it.
Therefore, don’t hesitate to ask your spouse to simplify the document’s contents for better understanding.
You have every right to comprehend the commitments you’re entering.
If your spouse struggles to explain or address your queries adequately, it’s prudent to seek guidance from your financial or legal advisors.
If it is a contentious or complex matter, consider seeking independent advice.
Although lawyers may sometimes exaggerate risks to safeguard their own liability, a reputable lawyer or financial advisor will offer a balanced perspective to ensure you understand the full scope of risks involved.
Remember, coercing someone into signing a legal document not only lacks moral integrity but also typically renders the document unenforceable.
Most contracts require voluntary consent for enforceability.
What if you aren’t around?
Losing a spouse is undeniably a distressing experience. Handling crucial financial decisions for the first time during such a trying period only exacerbates the challenge. Even simple tasks like navigating Internet banking or paying bills for the first time can become overwhelming.
It’s crucial to ensure that both spouses have sufficient experience in making financial decisions and managing household finances.
This preparation helps alleviate the stress associated with handling these matters during difficult times.
Therefore, it’s important to engage your spouse in these matters as often as possible.
Does your spouse know where to find your assets and liabilities?
A lack of knowledge can leave one feeling disempowered, especially in managing household finances.
If your spouse isn’t familiar with your investments, bank accounts, financial commitments, income, expenses, and so on they may need to undertake the daunting task of identifying these matters on their own, which can be both time-consuming and stressful.
However, having a comprehensive spreadsheet containing all relevant information can significantly ease this burden.
It provides a clear reference point for your spouse, streamlining the process.
Alternatively, if your spouse lacks the necessary skills, particularly during challenging times, you might consider recommending they delegate financial and/or legal management of your estate to your financial and/or legal advisor/s.
This ensures that these matters are handled efficiently and effectively whilst minimising strain on your spouse.
Relationship breakdowns can get ugly… quickly
“Plan for the worst, hope for the best” – Proverb
As the saying goes, it’s wise to prepare for potential setbacks while keeping a positive outlook on what lies ahead.
Consider this: statistics indicate that over 40% of marriages end in divorce, highlighting the importance of acknowledging this risk.
Based on my professional experience, it’s rare for relationship breakdowns to remain amicable throughout.
Despite often starting on friendly terms, they often turn acrimonious.
Therefore, it’s prudent to anticipate that your spouse may not cooperate as you navigate this challenging time.
I’ve found two key considerations to be important.
Firstly, ensure you have a comprehensive grasp of your financial situation, including assets, debts, income, and expenses.
Without this knowledge, it makes discovery a lot more stressful and costly.
Secondly, make sure that you can become financially independent.
For instance, if your spouse is the primary income earner, obtaining a credit card could prove difficult.
Whilst this is not the end of the world, it can make it more challenging to manage your financial affairs until a financial agreement is reached.
You might feel it’s overkill or unnecessary to make such arrangements today, but it’s important to consider what alternatives you have in the event of a relationship breakdown.
What can you do to help your spouse engage with these matters?
If your spouse isn’t actively involved in financial matters, there are steps you can take to encourage their participation.
Start by scheduling regular meetings to go over your financial status and how your investments are performing.
Simplifying explanations of investments and decisions can boost their confidence and comprehension.
However, I recognise that simplification can be tough unless you have a solid grasp of the concepts yourself, so do your best.
Lastly, encourage them to join you in meetings with your professional advisors to gain further insight and confidence in managing finances together.
If you don’t have a financial advisor, does your spouse know where to go?
Simplify matters for your spouse by drafting a letter of wishes.
In this letter, outline where they can seek advice, whom to trust, and where important information such as passwords are stored.
If you don’t currently have a financial advisor but believe your spouse may require one in the future, it’s wise to make a recommendation.
This proactive approach ensures they have the necessary guidance and support readily available when needed.
Protect yourself
It is your money and therefore your responsibility to ensure you take enough of an interest to protect yourself.
You should not delegate this responsibility, not even to your spouse.
