We hear so much about intergenerational wealth transfer, or passing on your wealth to your children or other younger family members. But what about before then? If you’re in a relationship, does one of you typically do the lion’s share when it comes to managing your financial affairs? Perhaps one of you schedules the payment of bills and does the due diligence when deciding whether to add an investment or sell a particular property within your portfolio. Do you worry about what would happen if that person can’t make financial decisions anymore? If so, you’re not alone. This is one of the main prompts that leads couples to my office.
When first meeting with members of a couple, I’m often told that one has taken the reigns with money matters for most of their relationship. The reason they took this role in the relationship may have initially been due to that person’s greater interest in financial issues, their mathematical or engineering background, or their preference to maintain order and, to some extent, control.
As their wealth has grown and close friends and family members have passed away or lost their ability to make decisions for themselves, the more worried they have become about their mortality and whether they might lose their mental capacity. Perhaps one of them has had a health scare, or they are approaching the age when a parent was diagnosed with dementia. They may be worried that they could lose their edge and start making questionable choices. Although my clients apologise for seeming paranoid or neurotic, these concerns are extremely common and absolutely warranted.
While there are a wide range of solutions to help futureproof your financial situation against the loss of one member’s ability to make decisions in your relationship, the following are 3 considerations that can serve as a starting point.
- Do you have unnecessary complexity in your finances? Would you or your partner struggle with any aspect of your financial situation if either of you weren’t around to take care of things anymore? Do you understand what you’re invested in, and why? Or the reason your companies and trusts were set up, and if they still make sense? Some complexity in your situation is often necessary, and could be costly to remove, but if either of you don’t know or can’t remember the reason for certain choices that have been made, finding out while you are still both able can be a great way of providing you with peace of mind. Revisiting the reason for things being in place can also help you to form a view of whether the rationale still holds. This can be tricky when there are legal, tax or other financial implications, so knowing when to involve a professional, and bringing the right person into your affairs, can result in substantial cost savings.
- Try to both be involved in every financial decision. While you may have established roles in your relationship that are deeply ingrained, and formed habits that see one of you take control of the finances, ensuring you both understand your wealth and the reasons for any decisions can empower either of you to take the lead when needed, while providing peace of mind that things won’t fall apart.
- Are your estate plans in order? If you or your partner were to unexpectedly pass away today, do you have legal documents in place that capture what you want to happen with your assets, businesses, and the control of any companies or trusts each of you currently control? If due to sickness or injury you can no longer make decisions for yourself, do each of you have documentation that allows someone else to make decisions for you? Is there a backup in case your selected decision maker can’t step in? Has a solicitor taken you through the documents to make sure you understand what they mean, and to confirm your wishes are in fact appropriately addressed?
If you’re in a relationship, it is common to worry about the impact to your financial situation if something happens to one of you. Addressing this concern doesn’t look the same for everyone. As a holistic comprehensive financial adviser, understanding what’s important to you and what keeps you up at night is crucial when developing a plan that is personalised especially for you.
To see how the help of a holistic comprehensive financial adviser can empower you to make truly informed decisions that are in your best interests, feel free to reach out to organise an initial phone call.
Bec has held senior specialist roles within the financial services industry for over 15 years. With experience within superannuation and successful wealth management boutiques, her clients value the sounding board, support, and expertise she provides.
Contact Bec today on [email protected] or 07 3114 8690
