Financial planner Helen Baker guides us through the really important conversation that many of us prefer to postpone – repeatedly.
Money is often a point of contention in relationships. It’s the most common cause of aggravation – more than division of chores, what’s for dinner or who’s in the mood (or not) for sex – and, in my experience, the friction comes from not talking about what matters, money-wise.
Important money talks with your partner don’t end with discussing spending styles, lifestyle values and goals, and saving and investment plans.
To paraphrase an oft-seen TV commercial, it’s important to talk about ‘what happens if I’m not here?’ Death, it seems, is still a taboo subject.
In recent years, I’ve gazed into the eyes of a dear friend, and a few clients, who have had a ‘heads-up’ that their time is coming to an end, but few of us do know when that will be and the vast majority of us don’t want to acknowledge it could happen.
What I’ve needed to emphasise is that there are conversations that need to be shared that, while uncomfortable or painful or scary or seemingly irrelevant now, can make a big difference in the future.
Part of that conversation is about money matters for a future that you or they may not be a part of and having all aspects of the financial house in order. It’s not enough to have an emergency fund and a spending and investment plan. Financial foundations also involve superannuation, insurances and estate planning.
Debt, death and being prepared
If a loved one meets an untimely, and unexpected, end, where would money come from to support those left behind? Talk about debts and income stream. An ‘emergency fund’ – that money tucked away for a rainy day – won’t last forever.
No doubt you insure your car, your home and your contents. What about your biggest asset – you? There is a range of personal insurances that could be considered, all the more so when you are partnered and have debts and dependants. The cover required changes during life stages: this is something to talk about with your partner and a licensed financial adviser.
Fine-tune estate plans
According to market comparison site Finder.com.au, nearly 10 million Australians are set to let down their partners and families by not even bothering with a will.
Dying intestate (without a will) causes needless heartache and headaches.
Anyone over 18 needs a will. You might not think you have anything to leave. But even if you worked just a little, you are likely to have some superannuation and, possibly, insurance within it. Who would you want it to go to? I recommend being open with your partner about your wishes and to expect the same transparency.
I also recommend seeking expert advice from estate planning specialists when children’s or grandchildren’s inheritances are involved, particularly in blended family situations.
Life change updates
It’s important to remember that when you marry, your will becomes invalid, but your superannuation nomination doesn’t. If you had nominated a former partner, and overlooked this update, that person could inherit a windfall!
I’m not generally a fan of ‘joint’ anythings. I’ve seen too many clients burned by ex-partners who have failed to make payments and left my clients with sexually transmitted debt. I’ll place a caveat on my stand though. For those couples who are ‘solid’, who have been together for years, and who are more mature in age, there can be a be benefit. In the case of a joint bank account, the survivor can still access funds that are in joint accounts: only those funds in the deceased’s name are frozen. In the case of utilities, it is easier to transfer the service account name to one already on the agreement.
Your wishes understood
Who has been appointed as your power of attorney or enduring power of attorney? It’s usually, not always, your partner. Do you have an advanced health directive? Discuss with your partner what your wishes are, beyond the paperwork.
Are you an organ donor? What about your partner? Understand where you both stand and accept the wish.
Likewise, for the last hoorah, having your wishes documented in detail, takes away painful decision-making (and potential arguments) at a time of grief.
Do you have a Facebook account? Would you want it memorialised or deactivated if something happened to you tomorrow? Talk about this with your partner and set up the authorisation with the social media platform.
I’ve long believed women are wired for security and that this can be attained through solid financial foundations. Have the talk: gain clarity, control, certainty and confidence that if death you should part, it’ll be (financially) okay.
Helen Baker is a licensed financial adviser and author of On Your Own Two Feet – Steady Steps to Women’s Financial Independence and On Your Own Two Feet Divorce – Your Survive and Thrive Financial Guide. Proceeds from the book sales are donated to charities supporting disadvantaged women.Helen is among the one per cent of financial planners with a master’s degree in the field. Find out more atwww.onyourowntwofeet.com.au
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Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.