In every relationship, trust and transparency are vital. This is particularly true when it comes to finances. As Kelly Quinlan, an advanced planner with years of experience working for Fidelity, has seen, financial infidelity can creep into relationships in surprising ways.
From hiding accounts to neglecting to consider a partner’s future financial needs, financial infidelity can manifest in both intentional and unintentional ways. While these oversights may not always be malicious, they can be just as damaging to a relationship.
The Importance of a Financially Transparent Relationship
An ideal financial relationship between spouses is one where both partners are fully informed, make decisions together, and have a mutually beneficial long-term plan for their finances. This involves complete transparency, as Quinlan emphasizes. Below, we’ll delve into six actionable steps you can take to help protect yourself from financial infidelity, intentional or otherwise.
1. Know Where the Money Comes From—and Where It’s Going
An annual ‘financial summit’ should be on every couple’s calendar. This is an opportunity to review budgeting, account types, account beneficiary designations, and any professional contacts involved in managing the family finances. Understanding the full scope of your assets, liabilities, and family’s cash flow will give you a clearer picture of your financial situation.
Quinlan has encountered many individuals who were unaware of their annual spending, leading to problems later on. Hence, working out a budget is crucial, as is considering meeting with an estate planning attorney.
2. Get Authorized to Access Financial Information
Make sure you have the ability to access and manage all relevant accounts. Whether it’s adding your name to the utility bills or ensuring you have a durable power of attorney for financial affairs, being an authorized user will allow you to stay in the loop.
Consider the nature of your joint accounts and how they would pass on in case of death or incapacity of the account owner. This helps in understanding how your assets are structured and ensures smooth transition if needed.
3. Take on Some of the Financial Responsibilities Yourself
It’s essential to take on some of the financial responsibilities, even if you’ve been focused on other areas like raising children or advancing your career. Quinlan points out that taking over certain financial tasks will give you a better understanding of your financial situation and establish regular dialogues with your partner about finances.
4. Be Present for Discussions with Financial Advisors
Attending meetings with financial advisors ensures you understand the complete financial picture. Building a relationship with the advisor will facilitate a smoother transition in case you have to take primary responsibility for the family finances in unforeseen circumstances.
5. Understand How Assets Might Be Transferred
Clear identification of beneficiaries and proper handling of assets, especially real estate, is vital. Failure to do so can lead to family disputes, litigation, loss of tax savings, or even unintentional disinheritances, as Quinlan warns.
6. Find Out How You Fit into the Bigger Picture, and Who Else Might Be Involved
Understanding your partner’s legal obligations from previous relationships or marriages is essential to avoid unexpected surprises. Quinlan has witnessed cases where a failure to clearly spell out intentions in an estate plan led to undesirable outcomes.
Conclusion: Don’t Take a Back Seat
Financial infidelity, whether intentional or unintentional, can undermine trust and financial stability in a relationship. As Quinlan aptly puts it, “Delegating tasks is part of every marriage or partnership, but don’t be complacent or take a back seat when it comes to your finances.”
If you encounter resistance from your partner in establishing financial transparency, seeking professional guidance from a financial expert or attorney might be the next step.
The essence of a solid financial relationship is built on trust, mutual understanding, and active participation. By following the guidelines outlined above, you are not only protecting yourself from financial infidelity but also building a stronger, more resilient financial partnership with your spouse.
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