When Only One Spouse Manages the Finances

Download: Surviving Spouse Emergency Manual

When it comes to planning for the unexpected, particularly for the unexpected death of a spouse, we most often talk wills, healthcare directives, POAs, life insurance policies, guardianship, etc. All of which are important and necessary. But what happens when the spouse who was primarily responsible for managing the finances is the one who passes away? Even if all of the estate documents and insurance policies are properly established, how does the surviving spouse, who rarely touched the finances, begin to organize the transition? What about all these important financial/legal documents? What about logins and passwords to pay bills? This is one area of estate planning that is less frequently addressed, but one that can be mitigated for a relatively small cost.

One Spouse Managing the Finance is Not Uncommon

According to a 2018 survey (1), 75% of Men said they either handle all of the finances by themselves or at least take the lead on the finances with spousal input. That same statistic was about 36% for Women.  The point being, there is a large percentage of couples where only one person is primarily responsible for managing family finances. This is not uncommon, nor is it necessarily a bad thing. Like in any relationship, each individual brings a unique set of talents and interests to the marriage, and usually that involves one person being more inclined to taking over financial and legal matters…in general. 

Regardless of who takes the lead on money management, when it comes to planning for the unexpected death or disability of a spouse, it's vitally important for both spouses to not only have a mutual agreement on the estate plan, but to also have a clear understanding of the logistics on transitioning financial responsibilities in the event of one spouse’s passing.  

What Can You Do Today?

In the unfortunate, tragic event that a spouse passes away (expectedly or unexpectedly), the surviving spouse should know where all of their important documents are located and how to access, which he or she will most definitely need in the following months. Trying to track down estate documents and bank logins can be an extremely stressful event during an already devastating time. So here are a few steps to go through with your spouse today, to be prepared as possible:

Step 1: Compile all legal and financial documents

Get as detailed as possible with this. You'll need the standard estate documents like Wills, POAs, Healthcare Directives, Executor Letter, etc. But you should also gather all insurance documents. And not just life insurance, but disability, home, auto, and health insurance policies as well. Consider compiling those documents that you rarely use like, marriage and birth certificates and Social Security cards. Collect all recent tax returns, bank statements, and even contact information for your CPA, Attorney, Financial Planner, and any other professional you've engaged. Basically anything that your spouse would need to takeover if you’ve passed, compile it. I've included a Surviving Spouse Emergency Manual HERE that gives a few more ideas on what you should be organizing.  

Step 2: Make digital copies

Once you've compiled and organized everything mentioned above, make digital copies of everything. While most of these can be accessed electronically these days, there may be certain documents where you only have a physical copy. It may be worth investing in a small scanner so that you have one handy when you receive new, physical documents that need retained digitally as well. Here are a few on Amazon that could likely get the job done. 

Step 3: Store digital documents on cloud or online

Once you've made digital copies, store them somewhere that will be accessible outside of your personal computer. There are several viable options out there when it comes to cloud storage (iCloud, Google Drive, DropBox, ShareFile). Obviously, you want a service that keeps your personal identifiable information secure (which seems to be more of a challenge these days), but most of the major services mentioned about should be safe and secure.

There are also online services specifically dedicated to storing personal documents, such as EverPlans or LifeSite. These services provide an option to give family members access to your files in the event of your passing, which can save them a lot of time and energy. 

Step 4: Setup a password manager

As we continue to move more towards a digital world, most of our day-to-day financial responsibilities are completed online. Most people now pay their mortgage, loans, and utility bills online. Tax returns are completed electronically. Even checks can be deposited digitally on your phone now. This makes access to these things even more critical for a surviving spouse. What if the primary "breadwinner" passes away and the surviving spouse has no idea how or where to pay the electric bill or mortgage? 

This is where a dependable password manager can come into play. These services store all of your usernames and passwords to every site you have an account with. Most of these services have very strong encryption protocols to keep your information safe from hackers. This is clearly superior and safer than storing your passwords in an excel spreadsheet. With services like DashLane, LastPass, or Keeper, you only have to remember a single password to access all of your passwords. This not only limits the risk of your forgetting a password, but it provides your spouse with all the necessary login details. You can make your spouse, children, or other trusted loved ones a user on your password manager account, giving them access to everything they would need in the event of your passing. The amount of time and stress this could save your spouse is phenomenal. Absolutely worth the investment! 

Step 5: Store physical documents in a locked fireproof (and waterproof) case

Although most things are done digitally, it is still important to keep some documents physically as well. For instance, your original estate documents. Also, some people just prefer to keep documents stored physically. For those documents you intend to keep physically (in addition to digitally), store them in a fireproof (and waterproof) case. While you hope the fireproof feature will never have to be tested, it can be a major relief in the event of a house fire. Most (if not all) of the fireproof cases are waterproof too so you're documents are protected in the event of a house flood as well. Amazon and Costco have some affordable options for safes that, again, would definitely be worth the investment.  

Step 6: Keep updated and review regularly

All of these precautions are only useful if you actually keep them updated. So as you sign new property & casualty insurance policies every year or take out an auto loan for that new Tesla, update your "vault" of documents. Make copies. Store in a secure place (physically and digitally). And most importantly, review with your spouse or loved ones regularly. At least once per year, sit down with your spouse and review where all these documents are stored and how to access. Discuss the practical next steps in the even something were to happen to the one who primarily manages the money. I understand it's a morbid conversation and not pleasant to imagine, but the consequences of not planning are far worse than the discomfort of a conversation. 

So take the time today to mitigate that risk by organizing, reviewing, protecting, and sharing financial matters with your spouse. Hopefully all of this work is meaningless because you never have to use it, but if you do, it'll make the situation less stressful for the surviving spouse. 

Download the Surviving Spouse Emergency Manual we put together to help get yourself organized!

(1) Data derived from WSJ Article Titled: “The Problem When One Spouse Handles Finances” which referenced data from the 2018 Trust Insights on Wealth and Worth, where the data is no longer available. Therefore, cannot verify data with 100% accuracy.