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Succession plan: could your partner manage the family finances without you? [Members]
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Thanks TA, it’s an important topic even for (especially for?) those of us who would prefer not to think about it.
From personal experience, I’d echo the comment about simplification. Nobody wants to be dealing with probate hurdles with one more institution just to claim a small amount that could probably have been merged into one of the main accounts years ago.
Thank you for this. I needed a veritable kick up the backside to get this done – this is very helpful inspiration. Just do it…
Thank you @TA for this v. important piece on a difficult to discuss subject.
October is Free Wills Month for those over 55. It’s supported by 19 partner charities (e.g. Age UK and British Heart Foundation) and, whilst where’s no obligation to leave a bequest, it would be nice if people could.
Many of us have photos of our spouses / partners, parents and grandparents; but perhaps not also audio. I so value having a snippet of my grandfather’s gentle Yorkshire voice on a 1980s cassette. I’d encourage everyone to have some audio of their loved ones. A colleague lost their spouse unexpectedly, and the only record of the spouse’s voice left was on their out of office phone message at work, which the office downloaded and provided. So much nicer to have both audio & pictures from each others lives together.
Ditto tranq’s comment. And this week I am on leave so have a good opportunity to do something about it.
I also like the idea of handing over a letter that they then need to hand back when it is time for an update, so they won’t forget.
Hi @TA, … well this is all very timely.
We lost my mother last year and it would have been less painful putting some pins in my eyes rather than sorting the majority of her stuff out (which in reality shouldn’t have been too difficult, but was).
And whilst I look after our collective finances, my DW is only slightly aware of what’s going on and how to look after everything … well maybe, sort-of.
Now here we are with me getting my prostate cancer diagnosis 2 weeks ago and this all feels like I really should be sorting this out fairly pronto, just in case.
Thank-you for the reminder and nudge – I’m on it and will compare and contrast your excellent thoughts with those of the community and make sure I get this sorted.
Thanks Monevator for this excellent article. Like yourself my better half bimbles along in the knowledge that everything is tickety boo as long as I keep doing my thing so to speak.
I thought what an ideal opportunity to appraise her of her malaise in all things financial. To take the easy easy out I forwarded your article and informed her to make sure to read it.
Well not long after, I noticed her with tablet in hand moving into the sitting room and I thought this could be the stimulus to getting some interest in the financial side of life.
Well then I popped my head around the door to see how it was going and she was in tears, I thought it was maybe a bit of a shock realizing all that was involved. But, these were tears of laughter. Through the laughter she tells me, this guy is writing about me, I know where the filing cabinet is.
So I am back to square one and she thinks it is hilarious that there are others off a similar disposition.
Undertaking the financial aspects of life can be a lonely place, but I now know I have Monevator for company.
Keep up the good work.
Gosh @TA I found that quite moving having followed your journey for many years. But it’s really great advice and as you say a good way to step back and reflect on where things could be simpler. Thanks for sharing it.
Having just turned 70 a very timely reminder especially as most of our pension income falls to me and the reduction will force her into drawing down savings/investments. A timely switch to an annuity should be considered (post 75 ish ?) but I worry that the financial advisors won’t be keen to recommend that as the assets under management would decrease.
By sheer co-incidence I’ve been sorting this stuff out over the last couple of weeks.
From my recent experience a password manager is very helpful especially if you can store notes as well as log-in details.
In my case, because I have no children and for a variety of other reasons, I’ve chosen a competent trusted young relative of my partner to manage my finances in the event of my becoming unable as well as after my death.
Sadly, unless one is much older than one’s partner, there is also a risk that they may be unable to cope when the time comes.
Well done for being so organised. We have something very similar, with a shared onedrive folder containing all the required documents. I regularly print out a copy of the main document and store it in a folder on my desk, in case something should happen to both of us.
I have been an executor a number of times and having well sorted out documents saves so much time. One point on credit cards (and other debts) is that these do not need to be settled promptly. Debts are all frozen and dealt with during the period of administration. Card companies do not add interest to accounts. On one particularly messy estate I didn’t settle a credit card for 9 months after the death. The credit card company didn’t chase at all.
Edit: on the subject of credit cards, make sure you have accounts in your own names. Don’t rely solely on additional cards as these are frozen when the main account holder learns of the death.
A timely reminder! Another vote for password managers. Can understand the reticence to store ‘all eggs in one basket’, but feel the benefits hugely outweigh any downsides.
I used LastPass for many years until their recent catastrophic security faux pas, and have now moved to 1Password which I’ve found excellent. Bitwarden is the other one (free, open source) to consider.
I was an executor recently for my father – while we did have his passwords for all his online accounts we did everything through the official channels (send a death certificate, etc) and were mostly pleasantly surprised – almost everywhere took a scanned PDF, provided a statement and generally didn’t cause problems. The really tricky things were shares held as physical certificates (he’d inherited these from his own father who bought in the 70s and just held them ever since – there’s a story I’m sure I’ve read here about how one broker worked out that their clients with the highest returns were those who were dead).
Anyway – the various small amounts (1k here and there) were simple, but there was just over >£10k in in a FTSE listed company registered in Jersey – which requires a whole separate grant of probate in Jersey, which requires either a very expensive intermediary to act for you or an in-person visit to the revelant government office on Jersey.
There were also a few US listed ones, where the US-based registrar wouldn’t reveal any details, including number of shares held (splits, reverse mergers etc made the calculations difficult) before we’d been granted probate (which in turn makes probate hinge on estimated values that thankfully turned out pretty close to correct).
There was an article on here about the pros and cons of broker nominee accounts and one of their definite pros is avoiding a lot of this faff and expense!
One thought having recently gone through this with my dad’s estate is that as soon as you notify of the death many institutions freeze access to the deceased’s accounts online and otherwise. So you can be waiting for probate (figure at least 4 months+) before you can get that unfrozen and access to the underlying. We were fortunate in that my mum had her own independent banking and pension etc so cashflow was never an issue and in some respects the small joint accounts they had were the easiest to transition to the survivor.
So I’d suggest that at least everyone’s emergency buffer is stored in a joint account that will still be accessible pre probate.
We’ve started to put together a summary of accounts and investments so our son can sort things out if needs be. My father kept stashes of papers round the house , so it was a bit like a morbid treasure hunt to ensure we had got all the information we needed. The comment about separate credit cards is spot on: when my Dad died my mother suddenly found herself without her main credit card and was offered a derisory £250 credit limit instead. However joint bank accounts are a must for couples as the assets transfer immediately on death.
Joint everything, where possible, is helpful for a couple when one of them dies. “Joint Tenants” is often thought of in terms of real estate, but it applies to other types of property as well, including bank accounts and investments. To transfer a house to a surviving joint tenant just requires a simple Land Registry form. With joint bank accounts it is also straightforward, typically a death certificate is all that is required to remove the name of the deceased from the account. Paper share certificates and joint nominee accounts are similarly straightforward.
There are some assets that cannot be held jointly. 2 that spring to mind are ISA accounts and premium bonds. Both of those require probate before they can be transferred.
Currently we have separate accounts for our non-ISA investments. That simplifies our individual tax returns, but is probably something we should look into at some point.
I have had mixed experiences when dealing with stock brokers and share registrars after someone dies, mostly not good. Computershare probably the worst of the lot. Hargreaves Lansdown on the other hand were fantastic. They send out an estate pack with everything needed when filling in probate forms. All investments correctly priced on the date of death, dividends due on XD investments, accrued interest correctly calculated on bonds and simple forms to instruct payment of IHT, transfer an ISA, etc. Amazingly competent.
Not something most people think about in advance and I have been meaning to find out from our various brokers, other than HL, what they do.
Pensions cannot be held jointly either of course. Fortunately these sit outside IHT at present so don’t require probate to transfer.
Now 77 (wife same age) so ……….
I do all the money -she spends it……
We use Quicken 2004 and we reconcile once a week
She enters her spend ( Credit Card) and I enter mine
Home page of Quicken displays state of the family finances each time you open it so she has some overall idea of our financial going’s on
The 3 children are joint executors-printed sheet with all our finances (actual figures) issued to them regularly-(a son in law is a banker as a bonus)
All paperwork in labelled box files-lawyer,cars, insurance etc
We have a joint bank account and a joint credit card -for simplicity
This might be a problem?
Mike Pipers book “After the Death of your Spouse “ is an interesting read though American
xxd09
@xxd09, you cannot have a joint credit card account. One of you will be the account holder and the other will have an additional card. When the account holder dies, the account will be frozen and the additional card will not work.
I went through this 10 years ago. My husband got us quite organised, as he did a probate which was a nightmare. Joint accounts where ever possible, joint accounts for me and joint accounts for him we didn’t share finances. This saved masses of probate admin, I loved him for that.
We used to have a meeting once a year at tax return time to review “the spread sheet” listing all the accounts and our fire target. An account list is essential with on line only accounts as there is no paper trail.
I’ve done ok, I am good with numbers, understand compound interest and have always taken a keen interest in personal finance.
I would urge you to Keep it really very simple, as when facing the sudden death of a partner you just can’t function, it took about 6 months for me to be able to face the probate admin, I had enough money to just carry on without doing anything difficult.
Thanks @TA for the reminder!
I like the idea of a paper letter, it’s more personal and accessible if I am not being around to unlock things.
I do have a spreadsheet with all of my accounts listed which I keep updated and occasionally print out but not regularly enough!
I use 1Password and think I have shared the master password in the past but again writing this into a paper letter will help to gain access to the keys to the kingdom if required.
I will have to look at converting my Starling account into a joint a/c as that is my main emergency cash store.
My investments are in an ISA and SIPP with Freetrade, so hopefully they will be helpful when it comes to probate.
Any advice on how to prepare for that?
Thanks everyone for the helpful comments
Naeclue-I was aware of this -simplicity is obviously a curse as well as a help at this time in one’s life
My wife has a instant Cash ISA so filling the joint (now single) current account as required may be the way out for immediate cash flow -hopefully joint current bank account ( after death now in a single name) with attached debit card can then take over for a year or two
Passwords are in a little black book which executors are aware of and know where it is stored
Obviously we are relics of a previous age -with joint accounts,joint credit cards etc
Nowadays we are all treated as individuals-financially as well as in everything else
Older people should then aim to separate their finances as will be the case anyway/ probably with the younger generation ?
Duplicate parallel systems but necessary?
The other more common problem of old age is probably the increasing or sudden incapacity of a spouse who has handled the money
However with POAs set up joint bank accounts and credit cards can continue as before
I am however keeping my children (executors ) seriously in the loop -with no kids a younger responsible person is needed -where do you get them?
xxd09
@ All – some incredibly moving comments here. Lump in throat stuff.
I’ve written before about the problems frozen individual bank accounts but didn’t realise that applied to married couples too. Need to rethink where the cash is stored as advised by BBBobbins.
I didn’t know about the additional cardholder problem either. We do have separate credit cards but more through luck than judgement. Thank you for your steer on this, Naeclue.
We don’t have kids so won’t be able to rely on a younger generation to run the show. That said, our parents don’t anyway. I have no doubt I’ll be doing the “morbid treasure hunt” as so brilliantly coined by CB.
@ Paul – it’d be worth looking at annuities now, I think. The rates have been transformed by the recent rises in bond yields. You can get a long way by doing your own research. When I bought them for my mum, I only needed to speak to a few annuity brokers towards the end. Just made sure I wasn’t missing anything, haggled over price, pushed the button. It’s worked out brilliantly for mum.
@ TLI – great point about audio. I wouldn’t have a thing as it stands. Need to sort that.
@ Wetherby – I hope it goes OK for you. My family has a history of prostate cancer and there’s quite a few of my generation and the one above who’ve undergone successful treatment.
@ Kaybee – thank you for sharing. That really brings it home. I guess I imagined Mrs TA smoothly looting any individual bank accounts with the passwords I’d provided but that doesn’t seem terribly realistic now I’ve read your comment. Cash needs to go in joint accounts.
@ Frank – that is funny. At least you’ve broken the ice, maybe? No word yet on this piece from Mrs TA – which makes me think she doesn’t read my work as religiously as she ought. We need the clicks!
This may be useful for anyone living with their unmarried / uncivilled partner:
https://monevator.com/how-unmarried-couples-can-protect-their-finances/
A few random thoughts from me…
– The focus of the article is on spouses/partners, but a lot of the points are equally applicable for single people. I give my parents and brother a printed document every year with the latest details of all my affairs.
– Insurance is another area to consider. I persuaded my mum to change their house and car insurance to automatically renew (from a joint account), so that we wouldn’t have to worry about them if she was suddenly out of action. The worst-case scenarios here are truly frightening (e.g. house burns down just after the old policy lapsed).
– The same applies to things like premiums and other important payments – much better to have everything automated so that these payments would continue for a few months at least without needing intervention.
– There are non-financial things that should also be considered. One is lists of social contacts – would you each know how to contact the others loved ones? Another is your wishes for funeral etc. My great aunt was in the awful position of thinking that her deceased husband wanted to be cremated, but being told by other family members that he didn’t.
– However hard or awkward these things are to discuss, it will be much worse trying to start conversations after someone falls ill.
This is excellent advice.
In the summer I lost my wife very suddenly and unexpectedly, we are both in our early 50s. It was me that dealt with the finances so I knew where everything was. We had a shared document with everything listed which was primarily for her.
There were still many things I didn’t know about dealing with a death, such as accounts being frozen. And even where to start.
We have benefit in death through work, but knowing how to start that process and not wanting to ask was fun.
Thankfully it was something we had discussed over the years and had wills etc in place. More importantly I knew what she wanted, even if it took some time to find the wills.
I am now putting together such a pack for our son. Clearly he has none of this knowledge and I will be simplifying things for him. Hopefully I will live long but recent experience has shown this doesn’t always happen.
I think the key thing is that you have this conversation as difficult as it may be.
Thank you for picking up a very important and much-needed topic. I had several takeaways from this: the letter, noting down mortgage renewal dates, SIPP Vs ISA withdrawal etc.
I’ve witnessed firsthand the difficulties that arise in such situations. Recently, helped a family friend search through the cabinets to compile a list of bank accounts. Unfortunately, there was no will or designated nominees.
Some items from my list:
Keep a document with all bank and insurance details. In my case, it is an online document and two trusted family members and my wife have access to it.
Maintain a list of each account’s balance for easy prioritization.
Grant a trusted individual access to your email account. Gmail allows you to do it without password sharing.
Ensure iCloud access options are set to prevent permanent loss of photos and videos.
Open new accounts consciously, preferably in the less active spouse’s name or as joint accounts.
Make a note of your accountant’s contact information, if you have one.
Make notes for self-assessment if you manage your own filings.
Review the property ownership structure: “joint tenancy” or “tenants in common”.
Keep professional contact details for life and medical insurance providers, as well as for your will provider, for easy reference
I’m unsure if there’s a way to designate nominees for private share ownership in an unlisted company or on crowdfunding platforms. A homework for me.
Thank you all for additional tips via comments.
Some excellent additional ideas here – all the more so for being born from experience. Thank you all.
Thank you for the excellent post @TA and the very helpful comments above. This has been on my ‘todo’ list since I unexpectedly early retired 9 years ago! My wife has access to the financials spreadsheet and ‘sort of’ understands it but your post has highlighted many gaps in information, knowledge and process that I need to fill. I will also now seriously explore using a password manager as I have recently discovered that my wife definitely doesn’t understand my cryptic clues to describe the actual passwords in my password file!
Onwards and upwards!
Visited my bank today-there is a Bereavement Team with a useful 20 page document-quite impressive
Joint accounts can continue as per with dead partners name removed
Surviving partner (if wife has a joint credit card) needs to apply for a new card
My particular problem is that over half our income comes from stockmarket investments in SIPPs and ISAs
How does a naive “investor”( surviving wife) learn what equity and bonds are,Asset Allocation and the finally selling units,moving cash into current account etc etc-impossible
Probably will be getting lessons from now on,she is in a more receptive mood for learning as at our age bereavement is common but the kids will need to be back up for the nitty gritty
I did approach a IFA a while back about being a manager of our portfolio but was rebuffed as they would only use their own investment choices so children it is as the backstop!
Probably the biggest benefit of all this is the open discussion of the inevitable
Who knows what form it will take but some preparation is bound to help what will be a fraught time
xxd09
Thank you for the article and all the thoughtful comments, esp from @naeclue re supp credit cards and shares and from @Dave S re having all insurance come out from the joint account. I thought I was quite organised but missed these aspects – will have to chase up with husband.
A few practical tips from experience, particularly if one is in a position to know that the end is near –
1) Get hold of the mobile phone and get the Lock Screen PIN + banking apps’ memorable word. The latter is not saved to password managers! Bank websites are very sensitive now – if you try to log in from an unusual IP address and move money, they will block it and call the account holder. Moving via an app which has been installed on a device for a long time is the least likely to trigger questions.
2) Move some money from any individual account into the joint account. Don’t move loads obviously as it may trigger questions later on, but a couple of thousand quid can be incredibly helpful to tide survivors of a modest estate through the probate process which easily lasts a year.
(2) was helpful for a friend with 4 kids whose husband tragically took his life which involved a few days’ difference in reporting the death to banking institutions.
Very insightful, reddot. Thank you.
I am somewhat bemused by all this discussion of password managers and leaving password clues. If you share your password with anyone, spouse or otherwise, you have almost certainly breached your bank or platform’s terms and conditions. If the survivor uses this information to access funds from the deceased’s account after a death, then it will be plainly obvious that this has happened when the institution is provided with the death certificate. The survivor will, in effect, have fraudulently accessed the account and its funds.
The only legal and effective way of managing this is to ensure sufficient funds are kept in joint accounts for the survivor to live on until probate is obtained and the proceeds of the frozen individual accounts can be released.
Of course, all the other advice about keeping easily accessible information on where money is held for the benefit of the survivor and executor is completely valid.
A final thought is that although we may all have had mixed experiences of the efficiency of various financial institutions, the bereavement departments are usually very helpful and well informed.
Thanks for this. Timely article – we are in the process of aggressively simplifying our respective parents financial affairs. (They are all in their 80s) to minimize the amount of stuff we have to deal with as they age and eventually pass. We’re not so diligent with our own stuff – and, classically, Mrs Finumus is just like Mrs TA – has no interest in any of this stuff at all.
If you have a POA or a private agreement where you use someones login credentials to access banks, brokers, etc. You really should stop doing that after the person dies. POA ends on death in any case.
Just another thought
Aged couples are by definition going to be on the look out for a younger person who will personally care for them (and their finances) as they start to lose the plot in various ways
This is a particular problem for the many childless couples that exist now -an increasing phenomenon-because the definition of this ideal person is a son or daughter
xxd09
Indeed, my practical tips were prefaced with “particularly if one is in a position to know that the end is near”, eg. when a family member was in his last days.
In the case of the friend with 4 kids whose husband jumped due to debts, accessing the personal bank accounts was not on my advice (her sister in law prompted her) and indeed this was “grey”, but I’d have said the same given the situation.
Vastly different considerations when you’re dealing with multi-million £, well-planned estates of this FI community, vs tiny ones when survivors would be impoverished during the 1+ year that the probate process / house sale is going through.
Ok, so that was harder than I thought, but I have my first draft. Hopefully a monthly update will be easier, and after a few months the changes will be minimal.
I also have a few more items on my to-do list (like rebalancing where emergency fund as are).
Thanks again for prompting this. Again, I really like the idea of a physical letter.
Great article and excellent comments. I have finally got around to doing my letter and have a few late comments on this article.
When I presented the plan to my wife the discussion was more emotional than I’d anticipated. I guess I’d been treating this as sort of an intellectual puzzle and not feeling what it really means.
Excellent idea that the recipient keeps the document and you have annual updates as a memory refresher that the document exists. I think a physical printed copy is better than online as we are physical creatures and we remember the location of physical things better.
Many here suggest that surviving partners continue the financial whizz’s investing strategy but I have advised my wife to consult an IFA in this scenario and start her own approach, as I may not properly understand all the implications of the different financial situation she would be in, and she is unlikely to have the headspace to learn about investing at that time. She could make expensive mistakes while figuring things out in a hurry and in an emotional state of mind. We all know emotion and investing are a very bad mix.
However, I have also explained how expensive it would be to have an advisor manage the money long term and strongly encouraged my wife to learn about investing, I have given a 1 page outline of vital concepts (passive investing, diversification, etc) and suggested further reading. Monevator of course is high on the reading list.
One issue I have not seen addressed in this discussion is what happens if the finance person is mentally incapacitated but still alive. I have detailed the income protection insurance cover I have, and am wondering if we should set up Power of Attorney even though we are still fit and young-ish.
Numerous people have suggested sharing a password manager. A word of caution – I would never put passwords for life changing amounts of money on any internet connected computer. There have been numerous publicised security breaches with various password managers (and I’ll bet a lot more breaches that are kept quiet), and if a criminal did gain access to your investments password safe the consequences could be catastrophic. My solution is to keep those critical passwords on an ancient laptop that is never ever connected to the internet and is used just as a password notebook. The passwords are kept in KeePass password manager software on this laptop so even if a burglar stole the laptop (highly unlikely they’d bother since its huge and obviously worthless) then the information is protected by strong cryptography. And the encrypted password safe is backed up on memory sticks I keep at work, so protected against fire, computer crash etc.
Power of attorney is a must as soon as you are married-finance and welfare OR due to the current safety measures in law installed to protect aged parents etc from financial abuse -you or your wife could find the state managing( slowly and incompetently) your incapacitated partners finances!!
One interesting sideline re ageing-another possible proviso,,,,,
Both partners could agree that if one partner thinks the other partner is losing the plot then they could ask for and get a medical examination of that affected partner and agree on the outcome- removal of credit cards etc
xxd09
Hello all
I know that this is an old thread, so maybe no-one will notice this – but if there’s anyone out there, would be interested in what instructions/suggestions you plan to leave for how funds should be invested after your demise. Eg, I note that one of us specifies Life Strategy 60.
Or, if you want it to stay as it is, what’s in it now?