Family Financial Conferences
  • September 28, 2018

Nearly every family has one person who manages most of the financial chores and activities.

In our experience that person is often considered the family CFO. And nearly every family runs the risk that the family CFO will die or become incapacitated before the other spouse.

That creates a multitude of problems for the surviving spouse. Not having any accurate idea as to the state of the family’s finances can lead to a series of issues, not the least of which would be failure to file tax returns, default on loans, damage to the credit history, etc. We have been witness to cases where the spouse is completely in the dark financially, and unable to make proper decisions regarding the family finances because of the lack of current, reasonably accurate information. This adds unnecessary stress to an already highly stressful situation.

One possible way to deal with this problem is through regular family financial conferences. These could be held on a quarterly basis between spouses, using income and expense reports that we provide every quarter. They should also include outside information such as aggregated investment account summaries, and perhaps even a quick review of the tax return.

Information we provide would cover how your money is being spent.

Quarterly reports will show spending by the various categories, and can be used to extrapolate annual spending (roughly) by each category. Having this information is critical, because it outlines how much money is being spent annually, and in the event of the death of a spouse, it can help lay out a roadmap of lifestyle changes that might have to be made to reflect changes in income.

Aggregated investment data will show where your money is. If comprehensive enough, it might even remind you of that savings account you opened in college that still happens to have $7,500 in it. One has to wonder just how much money is lying out there in decades-old accounts that no one remembers! The aggregated data should also show you roughly how your investments are doing so that future decisions can be made based on real data. There are online firms such as Mint that can help you pull all this information together. Your investment advisors should be able to provide you with quarterly summaries of your holdings so you don’t have to plow through the stacks of statements that come in the mail.

Another critical area is insurance.

Your insurance broker should be able to provide you with a schedule of insurance which outlines which policies are in effect, in order to make sure that your coverage is consistent with your present circumstances. You have to make sure that the schedule of insurance not only covers property and casualty insurance (such as your homeowners and umbrella policies) but also includes all life insurance policies. You should also determine if any insurance is being held by trusts, such as Irrevocable Life Insurance Trusts (ILITs) which are separate from your regular policies. Your trust and estate attorney should be able to provide you with this information, and keep you informed of any changes.

In summary, your personal finances are no different from a company’s finances; in many cases they are as complicated as those of a small company. Thus the need to have more than one person in the loop is essential. Having regular meetings between spouses is one way to avoid having to start from scratch in the event of a death or other serious incident.