Timothy C. Schewe
It’s not unusual for one spouse or the other to manage the family’s investments and asset
portfolio. It’s usually the husband, but more and more women want to know what’s going
on with the books. Good. Both spouses should know where the money is – and why.
Even if it’s boring. You may be taking care of that nest egg some day so learn all you can
about all you got.
Share the Knowledge
Whether husband or wife makes the investment
decisions, it’s important that the couple understand
where all assets are and what to do with them
should one spouse go to that big, ol’ cruise ship in
the sky. The sad fact is, many spouses die, leaving
the widow or widower with no idea of where the
money is. This leaves these people wide open to
every scam in the book – legal scams – and there
are plenty of them, and illegal money scams.
Further, the remaining spouse is now going to be living under completely different
financial circumstances so the asset portfolio may need to be changed to accommodate
this new, single lifestyle.
Look, you both worked hard to build up that book of assets. So doesn’t it make sense that
you both learn where the stash is stashed? And doesn’t it make sense to teach each other
about the dangers of scams and how to detect them? It does, so here goes.
1. Go over all of the assets – everything from the savings account at the local bank (just
for emergencies) to life insurance policies that may have been long forgotten. Make a list
of ALL of your invested assets including account numbers and contact information for
the brokerage you use.
2. Create all asset accounts as JTWROS – joint tenants with rights of survivorship.
This is, in effect, a joint account. Either party can conduct transactions within the account
without the permission of the other joint tenant. This makes it easy for the remaining
spouse to access accounts.
3. Do the math. Develop a budget for the remaining spouse. Everything will change. The
amount of Social Security received each month will change. Property may be sold.
Preservation of capital becomes more important than ever.
So figure up a new budget for the remaining spouse. You can contact your local Social
Security office for the SS figures. You know the mortgage payment, food, supplemental
health insurance – just go through your check book for the past 30 days. That’s a good
way to develop a list of necessary expenses, separate and distinct from fun money.
Knowing that there’s enough in the piggy bank for the remaining spouse to live
comfortably is, in itself, comforting. More importantly, these are decisions that should be
made in tandem to ensure the remaining spouse continues to enjoy a happy life.
4. Consider a reverse mortgage. You’ve probably heard a lot about these things.
They’re actually a pretty good deal for some couples who are cash poor but realty rich.
You have a lot of equity in your house. Maybe hundreds of thousands of dollars –
especially if you own it outright. That’s a lot of money, but the only way you can get at it
is to sell the house – something you don’t want to do for a bunch of reasons.
With a reverse mortgage, the lender (it is a loan, folks) pays you a certain amount each
month, slowly “buying” your house. You can live there as long as you like and sell any
time you want to. At the sale of the house, the bank gets back all of its money plus
interest (it’s only fair) and the remaining family members get whatever’s left over from
the sale of the property.
If you want to leave a substantial financial legacy to the kids, do remember that a reverse
mortgage is nibbling away at your total wealth each month. That money ain’t free. But, if
you don’t have any heirs, or you just want a more comfortable lifestyle now, look into a
reverse mortgage from a reputable lender – like a bank. Do NOT go with some fly-bynight
company that advertises in the paper’s classifieds. You want security and reliability
when it comes to a reverse mortgage.
5. Go over all of the details with your children or other potential beneficiaries. This
will help them plan their financial futures and there won’t be any surprises down the road
– surprises that can split a family apart. It happens all the time.
6. Keep a portion of your assets liquid. In other words, keep some money in a savings
account or money market fund for emergencies. This is money that you can get at today.
You can worry about that long-term CD at a better time.
7. Teach your spouse about the common scams used by unscrupulous brokers and conmen.
Sure, you may have a good broker now. A friend. A golfing buddy. Someone you
can really trust.
But what happens if your trusted friend retires and your spouse is assigned to some new
up-and-comer about which you know nothing (or ever will). If the survivor knows what
an IPO is, knows what account churning is, knows to never buy stocks over the telephone
– that spouse will recognize a scam when he or she sees it.
Sad but true. Scammers look for recently widowed spouses, recognizing that they’re
emotionally fragile and, perhaps, concerned about their financial futures. So, these poor
people are bombarded with solicitations for annuities, buying diamond futures and IPOs
from some dingy boiler room.
Even legitimate brokers – the long-trusted friend – can seize the opportunity and start
churning the family account to “align your assets with your new needs.” Or, these trusted
advisors can tie up the survivor’s assets in low-paying annuities with so much fine print
you could go blind trying to read all of those “whereas’s” and “wherefores.” Brokers
work on commission so, by moving some stocks (buying and selling), and adding an
annuity that guarantees a minimum of 3% for the life of the survivor, that broker isn’t
doing you any favors.
Also spend a little time explaining the bare basics of investing. Just the fundamentals.
The last thing you want to do is to leave your spouse with the feeling that “it’s all too
confusing.” It’s not if you, the teacher, keep it simple.
Diversification, risk versus reward, know where you’re money is at all times, if you don’t
understand an investment don’t invest – these are all good lessons to ensure that your
loved one is kept away from the predators of the financial world. And believe it, they’re
out there.
No doubt about it, it’s not a fun topic for discussion but it is a necessary discussion. The
sooner you get started, the sooner both you and your spouse will have the peace of mind
that comes with knowing where the money is – and where it’s going to come from in the
future.
Do it today. You (and your spouse) will be glad you did.
