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Points of Financial Advice for Married Clients

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Jul 25th 2018
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Here’s a news flash for you: Money is the No. 1 cause for divorce in the U.S., according to marriage.com, but that doesn’t mean financial trouble automatically will sink your marital boat.

A recent study about Couples and Money by Fidelity reveals five key ways that married couples can agree (or disagree, we suppose) about money concerns. However you agree or disagree, communication is very important.

A recent Fidelity survey found that 1 in 7 couples couldn't accurately report their spouses' employment status. Almost half -- more than 4 in 10 -- disagree on when to retire—and more than half aren't on the same page about how much to save for retirement.

“That may not be surprising, since money can be a tricky topic in families,” says Ann Dowd, CFP, a Fidelity vice president, in a prepared statement. "But not laying the groundwork for open money communications can undermine relationships."

There are five recommendations for marital bliss. We’ll add a sixth: Talk a lot. Here are a couple more:

1. Sit down, have a nice glass of wine (that’s our recommendation), and list your financial accounts

List them all -- checking, savings, credit card, investment, 401(k), IRA, the works. Let each other know what accounts each of you has and which banks and investment firms they are with.

Create a spreadsheet with account numbers to keep track of the accounts. Consider sharing passwords and PINs with your spouse for funds that may be needed immediately. (We’ll skip the trust factor here.)

Take an inventory of your accounts to get organized, which can also help lay the foundation for investment decisions that you may want to make jointly or individually. Cybersecurity breaches are rampant so consider whether or not you want to use your financial firm’s virtual “safes.”

2. Set up and name account beneficiaries

Naming beneficiaries is as important as writing a will, according to Fidelity. Because that means that assets in the accounts go to the beneficiaries, account custodian, trustee or plan administrator – and generally supersede instructions in the will.

Special note here: Retain the best estate attorney you can afford. Check your state’s Bar Association to see who heads the Estate section and contact that person.

Updating beneficiaries on financial accounts isn’t hard and many financial service providers let you do it online. Naming beneficiaries on all accounts can help avoid legal complications in the event of a death.

Here are the accounts that Fidelity’s study thinks you should consider:

  • Retirement accounts: Keep in mind that, if you’re married, some employer-sponsored retirement plans automatically name your spouse as the beneficiary unless you name someone else and your spouse has signed off on that. Check with your company.
  • Nonretirement bank or brokerage accounts: Designating beneficiaries on these accounts may set up a “transfer on death” registration for the account. That allows account ownership to transfer to the designated beneficiary upon your death.
  • Insurance policies: It’s important that your beneficiaries reflect your current wishes on life insurance policies. If you forget to change the beneficiary after a big life event like a marriage or a divorce, insurance proceeds could go to the wrong person if anything were to happen to you. (Trust us, there are court cases about this.)

The 2018 Fidelity Investments Couples & Money study (formerly the Couples Retirement Study) analyzed retirement and financial expectations and preparedness among 1,627 couples (3,254 individuals). Respondents had to be at least 22 years old, married or in a long-term committed relationship and living with their partner, and have a minimum household income of $75,000 or at least $100,000 in investable assets.

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