They may be the person closest to your heart — but how much does your partner know about your financial affairs?
Research last year by Prudential revealed the secretive nature of many couples’ finances. Almost one in three had built up savings that were hidden from their partner. Two in three were clueless about what their combined income would be when they stop working.
For the young, this may be of academic interest. It can even be prudent to have the insurance policy of a secret nest-egg if your partner is profligate or inconstant. But regularly talking about money gives couples a better chance of attaining financial compatibility — hence the concept of a “financial date night”.
Prudential found that many couples were not only failing to talk about future financial plans, but were keeping quiet about their current financial situations. One in five said they had not disclosed their exact income to their partners and one in six said they did not know what their partners earned. It is not surprising, therefore, that 46 per cent of couples questioned feared running out of money when they retired.
Financial secrecy in later life is dangerous and can leave both partners accidentally worse off. In most relationships, one partner or the other takes the lead in looking after household finances — you won’t be surprised to learn that in my family, that’s me. For older couples, a lack of knowledge about joint finances can be disastrous if the money managing half of the couple is taken ill or is the first one to die.
Like many spouses who leave finances to their partners, my husband is vulnerable. I have always handled his investments, savings, pensions, insurance and tax returns. He willingly signs when necessary.
He readily admits that he does not know how much our joint savings are. We don’t have secrets, but we do have complexity. Our savings and investments are in many pots to minimise risk and maximise returns. Although we have already sorted out Lasting Power of Attorney, If I were to become incapacitated or die suddenly, he would not know where to find the relevant documents. So this year, I have made a resolution to get him up to speed through a series of financial date nights.
My task now is to tidy up our investments and financial information and get all our documents in one place with a schedule of dates when action will need to be taken.
One obvious problem is: if I die, how will my husband access my online accounts without my passwords?
Getting access to money in a joint account is never usually an issue. But many of our savings and investment accounts are separate. My husband has already arranged with his banks and credit card companies that they can discuss his financial affairs with me. But UK Finance tells me that “all third-party arrangements cease to apply upon death”. The executor then becomes responsible for the deceased’s estate.
The trade body also warns spouses not to share their personal identification numbers and other passwords. This makes sense in the here and now — sharing Pin and password information doubles the risk of fraud. But it also doubles the complications if one partner dies or becomes incapacitated. So my husband and I have chosen to share details, taking care to keep them guarded with a secure online password vault called Last Pass.
There are other dangers if couples put all their bills and accounts in one name. Research for Experian showed that there are currently 5.8m people in the UK, who are virtually invisible because there is insufficient information available about their finances.
James Jones, head of consumer affairs at Experian, says: “If couples are open about their finances and work together to improve their credit reports and scores they will be at an advantage when it comes to key financial milestones.” When couples apply for a joint financial product such as mortgage, loan or bank account, their credit reports are likely to be “linked.”
However, Experian research found that only 42 per cent of people said they would speak to their partner about their credit history.
Our first “date night” dealt with National Savings & Investments — his holdings and mine. If I should die, my husband should fill out a death claims form on its website and once it has this it should make contact within 11 days, according to NS&I.
While deed of probate needs to be applied for if the savings are worth more than £5,000 after the funeral costs, NS&I will pay out part of the savings early to cover these.
My premium bonds cannot be transferred to my husband or anyone else, but they will remain invested for up to 12 months and any prizes will be paid by warrant. The record of winnings that I kept since the first purchase in 2001 demonstrates how low the return is now. My husband was surprised that my holding achieved only a 1.25 per cent return last year compared to 5.8 per cent in 2007.
My husband also knows about the death notification service created to allow the bereaved to notify multiple financial institutions at the same time. If it is notified before noon on a Monday, all financial institutions should receive the information by 4pm the following day.
However, bereaved partners need to say which banks, building societies and other financial institutions they and their spouses had accounts with. They don’t have to provide account numbers, sort codes or other information, but it is better to do so — we now have a list of all of ours. The institutions will then update their records accordingly and advise of the next steps to take within 10 days.
Our next date night will deal with pensions. My husband says it may need to involve a higher standard of food and wine. Bon appétit!
Lindsay Cook is the co-author of “Money Fight Club: Saving Money One Punch at a Time”, published by Harriman House. If you have a problem for the Money Mentor to look into, email firstname.lastname@example.org