Don't Wait Until a Death to "Balance the Checkbook"

By Andy Andersohn

Recently a friend died suddenly and his wife had never taken much interest in their family's financial situation. She figured that she had plenty of time to talk it over with her husband. They had briefly talked about going over their financial affairs but they never got around to it. After his death she had no clue how much insurance he had or where the IRA's and 401k's were located. The check book was even a mystery as she used a credit card for any purchases she had to make and her husband wrote out the checks and paid the bills. Several reoccurring bills were paid directly from the checking account and she didn't know the passwords to get into their on-line banking accounts.




After some study it was apparent she was not an isolated case. All too often women-and some men-leave the family finances to the other spouse. When the unexpected happens, death, disability or divorce the uninvolved spouse can be left with no clue as to the family's finances.

The problem, in most cases, would have been manageable if the spouses had discussed their finances. How to approach this can be difficult as the spouse managing the money may feel they are being criticized in their handling of the finances. The other spouse has to take some responsibility in this matter by asking questions and showing some interest. At the least women may have to know how to handle finances as many outlive their husbands, they never marry or they get divorced.

One suggestion is that the spouse who manages the money make up a folder for the other listing all the accounts, insurance policies, location of wills, and safety deposit boxes. It should be kept in a safe place and updated periodically. A listing of passwords for online accounts is also a good idea, although it should be kept separate from the listing of account numbers.

Another thought is for the managing spouse to allow the other to take a turn paying the bills and balancing the check book from time to time. Further, the family should update the family's assets, debts and other obligations at least once a year. If there are financial advisors involved both should meet with them periodically.

Now that she was alone it's still not too late to become knowledgeable in "balancing the checkbook." However, it could be a mistake trying to do everything at once. The first step is finding out what bills need to be paid and what income is available to pay them. She needs to find out what benefits continue or change after the spouse's death.




Longer term, taking one step at a time, she can study various gaps in her financial knowledge so at least she can ask the right questions and develop and weight her financial options. This way she'll become more comfortable in dealing with financial issues and is more likely to make good decisions.

Andy Andersohn is a small business owner and long time tax preparer. Learn more valuable tax planning resources for business owners and individuals. Get your FREE 11 page Tax Saving Guide. Find up to date tax articles. At our tax tips blog, discover more tax help and good ideas.