Equation for Two is a recurring series about what happens when financial independence (FI) becomes something two people are solving together.
As you can probably tell if you’ve been a regular reader of mine, I have no shortage of things to say about personal finances. My wife, Jamie, will strongly attest to exactly that, since I’ve bored her on countless mornings with my financial dreams, plans, and updates.
But there’s a difference between talking about your finances with your partner and giving them a road map they can follow if you aren’t there to lead the discussion.
Most relationships split household duties. Rarely evenly, and rarely by formal agreement, but there are tasks where one of you pulls more weight than the other. Doing the dishes, laundry, cooking, yardwork, repairs, weekend planning, trips to the store, driving the kids around, taking the pets to the vet.
None of it is set in stone, but we slip into routines. And when the person who usually handles one of those jobs misses a week, their share of the work piles up. Dishes in the sink. Laundry on the chair.
It’s just as common for one person to handle most of the finances, even when both are contributing income to the household.
Here’s the important distinction:
If something happened to the person who handles most of the cleaning, things would pile up for a while, but the other could still get through their day.
If something happened to the one responsible for the finances, things could come to a standstill.
Whether you handle most of the money or you’ve delegated that responsibility, take a moment to picture a scenario whose likelihood is not zero percent: the unexpected loss of the partner who oversaw the finances.
Within days the surviving partner is trying to piece together what happened and what it all means for the future. Then the realization hits. They don’t know where anything is.
How can they access the accounts without the correct login information? Even with it, are they listed as an owner on the account? Were they named as a beneficiary when the forms were filled out 5, 10, 30 years ago?
This is a scary, but all too real, scenario. And it cannot be fixed after the fact. It has to be confronted ahead of time, and no time would be better than now. I promise you that.
I had let this slip on my end. Jamie is aware of the various accounts we have. We use an app where I’ve linked all our accounts, so she knows which ones exist, and she uses a password manager that helps with accessing them. But if I’m being honest, I haven’t done my part of keeping it updated so all my accounts are stored there too. I also haven’t saved our financial plan document somewhere she can readily reach it.
I’ve allowed myself to let those items slide, in part, because I know Jamie is fully capable of stepping into managing our finances on her own, or of finding someone trustworthy to advise her. That is not the case in every household.
If your partner would be starting from zero, or wouldn’t know where to turn without risking being taken advantage of, then the list of trusted names and the copy of the plan move way up the urgency list. Which is why I’ve come to think of this as two tiers rather than one long to-do.
One thing worth knowing before the list. For retirement accounts and life insurance, the beneficiary form on file generally determines who receives the money, even if your will says something different. A will signed last year may still lose to a beneficiary designation filled out twenty years ago. That’s why confirming those forms sits in the first tier, while the will itself can wait for the second.
So here’s what I’m working through in our own household, starting this week.
The don’t-leave-them-locked-out list (Tier 1):
Make sure both of you know where every account lives and how to log in, with that information saved somewhere safe and protected. And don’t forget the devices, email accounts, or authentication apps needed to actually get in.
For everyday accounts, like checking and savings, confirm you’re both listed as owners so either of you can act. If an account only has your name on it, ask the bank what your partner would need in order to access it.
For accounts that can only have one owner, like a 401(k) or IRA, confirm the beneficiary on file is the person you would choose today, or update it. It usually takes minutes.
And the make-the-hard-days-easier list (Tier 2):
Share, in a protected but reachable place, the additional planning information a surviving partner would benefit from. Include the names of anyone you’d trust them to reach out to for financial or personal matters.
Complete a will, and alongside it an advance directive covering how you’d want to be treated in certain medical situations, plus any funeral wishes. They’re separate documents answering separate questions, and both spare your partner from guessing.
I can’t imagine how difficult those first few days would be when someone loses their partner. Their person. And I hope I never have to. But I want no part of adding to that grief the stress and fear of being locked out of a checking account when the heating bill, the mortgage payment, and the funeral arrangements all come due.
There you have it. About an hour of your time could help your loved ones get through the hardest days of their lives. Dishes can sit in the sink for a week. This can’t. Don’t let it pile up and become their problem to deal with.
Writer’s Note: I’ve written this from the perspective of a couple because that’s what this series is about, but the same applies to anyone with loved ones who would need to step in, or wishes they’d want carried out.
— Brad
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This is meant to help you think through financial decisions and tradeoffs—not tell you exactly what to do. It’s general in nature and not personalized advice (see full disclaimer).