How to make finances simple for your surviving spouse

Question

I have managed the family finances without a financial adviser and done well. I am concerned that when I pass away, my spouse, who has no interest in money, will not know what to do. What can I do now? I am 70.

Answer

Many households have one partner who naturally takes charge of the money. They manage the investments and ensure that everything runs smoothly. The other partner may be less involved or even completely uninterested in the financial side of life.

This arrangement works – until life changes. If the financially savvy partner passes away first, the surviving spouse may suddenly find themselves having to navigate complex investments, online accounts and tax documents – often amid grief.

Fortunately, there are steps you can take now to protect your spouse and make that future transition as painless as possible.

1 Create a financial ‘blueprint’ for your spouse

Start by documenting everything. Think of this as a road map for your spouse, a guide that explains how your financial system fits together. You should include:

• A list of all investments, policies and accounts with clear reference numbers and contact details for each institution;
• A simple explanation of how your investment strategy works – in your own words. What is the objective of each investment? What are the short-term and long-term objectives? Are they there to produce income or growth?;
• Details of all your income streams, including pensions, annuities, rental income or dividends, and when they pay out; and
• A list of all the monthly obligations such as debit orders, subscriptions and insurance premiums.

2 Test-drive a financial adviser while you’re still around

Even if you have handled everything brilliantly, it’s wise to introduce your spouse to one or two financial planners now rather than later.

Start small and choose one investment and let a potential adviser manage it. Watch how they work:

Is their approach like yours or are they just selling a product?

Do they explain things clearly?

Are their fees reasonable and are they transparent?

Once you find someone you both trust, you can gradually entrust them with more.

This lets your spouse build familiarity and confidence, knowing that there will be someone dependable when you are no longer around. Also, you will have vetted the adviser, so the risk of getting someone who will take advantage of your financially inexperienced spouse will be significantly reduced.

3 Consider a voluntary life annuity

If your spouse isn’t interested in managing money, consider getting a voluntary life annuity. This provides a guaranteed monthly income for life, removing the need for continuous decision-making.

There’s no need for your spouse to monitor markets or make withdrawals. This option works particularly well when you want certainty of income.

4 Maintain a ‘loved ones file’

This is one of the most powerful tools you can create. Your “loved ones file” is a personal instruction manual for your family. It contains everything your loved ones will need in one place. You should include:

• Copies of your will, IDs, marriage certificate, insurance policies and title deeds;
• Passwords and access instructions for digital and banking accounts:
• A list of key contacts: your attorney, financial planner, executor and accountant; and
• A note explaining your investment approach in simple language.

When clients of mine have used this file, their families have said consistently that it was the single most helpful thing they left behind.

5 Have the conversation now

The documentation is essential, but don’t stop there. Sit down with your spouse and go through the plan together. Show them how the accounts fit together, what happens to each investment when you pass away and who to contact first.

This is not a one-time talk. Review it annually – perhaps at tax season or when you update your will. Each repetition helps your spouse to grow more confident and less anxious about handling things later. DM

Kenny Meiring is an independent financial adviser. Contact him on 082 856 0348 or at financialwellnesscoach.co.za. Send your questions to kenny.meiring@sfpwealth.co.za

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R35.