Don’t keep life partners in dark about finances, assets

According to a recent study released by CreditCards.com, about 13 million Americans have hidden their information about the current, savings account, credit card details and balances with their spouses or live-in partners. A slightly greater share of women (about 6 per cent) than men (5 per cent) have kept it out of the sight of their partners. Though the report is mostly based out of the US, it reflects the lack of trust in disclosing all the details to their partners. Keeping such information hidden from partners may create problems in the aftermath of an unfortunate event such as death

Recently, one of my ex-colleagues expired. It was so sudden, he just switched jobs and in the very next day, I got to hear this bad news. May his soul rest in peace! But being in this field, the first thing that struck me was, if he’s adequately insured and was his family aware of the various investments he did. Now, that his loss is irreparable and irreplaceable, the question that comes to mind is - has the entire documentation been perfect with his investments/assets? He being a financially prudent person, things could be almost fine.

According to a recent study released by CreditCards.com, about 13 million Americans have not mentioned or hidden their information about the current, saving account and credit card details and balances with their spouse or live-in partners. A slightly greater share of women (about 6 per cent) than men (5 per cent) have kept it out of the sight of their partners. But the trend was more pronounced among the younger (age 18-29) generation - the millennial, could be out of their age or lack of maturity nevertheless a dangerous trend. Forget Swiss accounts, the new secret account is the one hidden from their spouses/ partners.

Though the report is mostly based out of the US, it reflects the lack of trust or confidence in disclosing all the details to their partners. It may not always be about maintaining secrecy but could also be a callous approach towards their finances. This is because, how could one be able to make a budget without disclosing all the relevant information on their accounts. No amount of financial planning or assistance from a professional suffices this kind of an act. Also, this kind of secrecy could ruin a marriage.

Even in India, where the divorce rates are relatively lower at 13 per 1,000 to that of 500 per 1,000 in the US, have been on the rise in the past decade. The rate was about 1 per 1,000 ten years back. The most common reason other than the waning influence of the family, lack of compromise and the psychological independence is the growing financial independence and the lack of sharing information on the finances.

So, how to confront these issues and weed out these differences which not only help in having a peaceful married life but also a seamless transition in an unfortunate event of death of one of their partners? A first and foremost need is to be transparent. The underlying premise however is the trust and faith in the partner as this would require one to disclose their habits, some of them impulsive and avoidable. But, this bridges not only the gap on the psychological level but also helps from the financial standpoint of shouldering and sharing the burdens or goals.

The next immediate move is to register nomination across all forms of financial instruments. One might have done it at the time of investment but forgot to update it later with the change in the marital status. This could mean replacing the name of the parent(s) with that of the spouse post marriage or in case of separation/divorce, to replace with the new spouse or kids. This removes a potential problem of claims at the time of an extreme event.

The next important act is to prepare a will. Here again, most people wonder the need for a will, registered or otherwise. This is critical so that the right of ownership or claim over an asset (physical or financial) would remain with the nominated person and rests any dispute otherwise might spring up after the demise of an individual. While in their existence, one might be unaware or seem to ignore the peace a will could bring in among the dependants, it surely would dispel most of the inherent differences.

(The author is a practising financial planner and could be reached at k.naresh.k@gmail.com)