Even if you are completely capable of handling all your own affairs, having trusted advisors can be more valuable than you might think.

I once received a phone call from the daughter of one of my clients, asking me how much money her father had in his account. Of course I declined to provide that information, but I was curious about the reason behind her question.

The daughter told me her father (my client) had passed away, and her mother (whom I had never met) knew that her husband had an account here but didn’t know any of the details. The mother was upset, wracked with worry and fear about her financial future. Did we manage $10,000 for her late husband, or $10 million? She didn’t know. The daughter had left her job in another state and moved back to Washington to help her mother sort things out.

Fortunately, the father’s account was more than enough to meet his family’s needs. Once I was able to disclose the account details with the daughter and her mother, they calmed down quickly.

The angst experienced by the wife and daughter was unnecessary, and I’m sure my client never intended that it would happen.

My client did lots of things right, and that helped him accumulate a portfolio big enough to take care of his family when he could no longer do so. But one thing he didn’t do was keep his wife adequately informed about their finances. She didn’t know what they owned or what they owe.
 

Her daughter found my name while she was rummaging through the house for account statements and insurance policies. Once we talked, I invited the two of them to bring all the paperwork to my office so we could make an inventory and then a comprehensive plan.

Too many times, providing a relationship with a trusted advisor is an overlooked detail of household financial management. I have clients who are quite content to be do-it-yourself investors in no-load mutual funds. Some of them hire me to manage only part of their portfolios just so there will be somebody at hand to help out when they are unable to continue managing things.

It’s too bad, but many financial “solutions” are recommended more for the sake of earning commissions than to be helpful.

Widows (and widowers, too) almost never suffer for the lack of offers to help. Insurance agents are often eager to earn commissions by converting life insurance proceeds into annuities. Many brokers and financial planners use death and funeral notices to seek new clients from among the bereaved. Some mortgage brokers are eager to offer refinancing and reverse mortgages to widows, whether or not they are needed. Many real estate agents see opportunities around every corner, especially in the wake of major life changes.

Such issues are difficult enough for people who are fully functioning. For survivors dealing with the loss of a loved one, the details can be overwhelming. Unfortunately, it’s easy to make very costly mistakes that in some cases cannot be undone.

Handling the family finances usually falls naturally to one member of a couple. I frequently see cases in which the person in charge is happy to inform a spouse in only vague terms. Many spouses are only too willing to go along with this.

It’s fine to have one person in charge. But when a spouse is excluded from important knowledge, this is not healthy.

Several times I have heard one spouse say to the other: “I’ve been worrying what I would do with all these accounts if something happened to you. I just didn’t know how bring it up.”

I’ve never met anybody who would want his or her bereaved spouse to have to drive around town interviewing various advisors and fending off salespeople trying to find someone who can be trusted. And no thoughtful, considerate partner wants to force a spouse to make such decisions under pressure.

Fortunately it’s not hard to avoid such a scenario.

My advice is always to have a primary advisor who you trust completely to coordinate and facilitate everything. This can be an attorney, a CPA or a financial advisor. Make sure your spouse knows who this person is and that the advisor knows who else is on your “team.”

In a recent review with one of my clients, the husband told his wife how important it was for him to have a plan in place if something happened to him.  I could see from the look on her face that his thoughtfulness had put her at ease.

I once received a call from a widow who had been given my name by one of my clients. She came in with a thick folder of statements and said: “I don’t need to know how all this works. Please just tell me if I have enough that I don’t have to worry.” Fortunately she was in good shape financially, and she now receives monthly withdrawals that are deposited automatically into her bank account.

She knows that if she follows the spending plan we have established, she has very little risk of ever outliving her funds, and that is a good and comfortable outcome for her.  However, her husband didn’t leave her with the safety net of an advisor. After his death, that put her at risk of falling into the hands of a broker or salesperson who might try to take advantage of her.

While all couples have different relationships when it comes to money, it is important for your spouse to have a general feel for your position and how things work.  I always say, you don’t need to be an expert, but at least be in the loop.        

I manage some money for a delightful couple in their 80’s.  They established a relationship with us because they wanted the peace of mind knowing an advisor was keeping an eye on their accounts. I believe he feels secure knowing that if he ever had memory problems his wife’s financial future couldn’t be jeopardized by his lack of investment vigilance.

My smartest clients typically keep their insurance policies and other important financial records where they can easily be found by a surviving spouse or other family members. They also make sure that close friends know who their trusted primary advisors are. I’ve seen lots of good-intentioned relatives step in and steer someone in a direction that is less than ideal.

When the widow and daughter of my recently deceased client came into my office with their records, I was able to help. Sure enough, an insurance agent was trying to persuade the mother to buy an annuity with life insurance proceeds. I told them not to lock up the cash that way. Instead, I said, use some of that cash to pay off the credit cards and a high-interest personal loan that was outstanding.

The widow thought she should pay off her mortgage. When we examined that issue and ran some numbers, she came to see that the interest rate on her mortgage was quite favorable and she could easily continue making the payments. I helped her understand that tying up her cash by paying off a low-interest mortgage was the equivalent of putting a lot of money into a low-interest, illiquid savings account. She and her daughter agreed that was not the best use of her money.

In following these steps, there is now a straight forward strategy and we have given her the very best chance for a secure financial future.