Not everybody is keen or happy to share personal financial data with one’s family. Money is very private – and there are men who will not even want their wives to know the more minute details. It can also alter the family dynamics, demands, expenses even impact some other family members negatively! There is a lot at stake and it cannot be undone!
Having said all that, it still makes sense to open your books (so to say!) – which would mean your online portfolios, bank accounts, mutual funds, life insurance policies…etc. to your family. The obvious reasons of course are you never know when someone else, MAY HAVE TO STEP in and handle your physical needs if you are incapacitated. Remember the cricket team takes 2 wicket keepers? This person could be your spouse, sibling, elder kid, or even a parent. By including that person today you are just getting them to do a warm up and make them understand your way of thinking, logic and which investment is for what.
I encourage all my clients to create excel sheets of which is investment is for which purpose – if they do not want to create a proper Investment philosophy statement. Of course if the husband and wife are doing the investments together the need is lesser, but having it in writing helps. Try it.
WHAT TO SHARE?
Start by sharing bank account details, which are the mutual funds in which you have invested, your living will – what you want to do if you are incapacitated, and giving a Medical Power of Attorney (do not bother about its legal validity). Tell your spouse everything and in case she cannot operate independently bring in a person who can handle the operations – could be your own kid if he/she is grown up or a sibling or a good friend. This means all your financial details are now with one more person. As and when you update make sure you keep the other person informed.
WHAT NOT TO SHARE?
YOU do not need to share your bank password, mutual fund access password, etc. ..KEEP IT WRITTEN DOWN IN AN ENVELOPE and let only your spouse access that in case of an emergency. I encourage husband and wife to do transactions together in mutual funds etc. so that not only does your spouse know things, but is also used to doing it regularly. I find it difficult to believe that well qualified women do not even operate the ATM – saying ‘he does it’. You do not have to share the DETAILS of your will – but the location of the will should be known to your spouse, sibling, children, and the person whom your sharing the financial details.
Having covered who, what and what not lets see how to share the financial information…
HOW TO SHARE THE FINANCIAL INFO?
Having decided who you are going to speak with prepare a password protected word and excel document that summarizes your situation. Make sure you tell him where the information is lying. For me it is www.valueresearchonline.com and /or www.moneycontrol.com. Even the document that you make should be sent on email to your spouse so that you can access it wherever and whenever YOU want immaterial of where you are. Hopefully your new financial confidante won’t have to access your data for many years to come but you want to leave them a map of where to find your treasure trove in case the need arises.
Talk about the comfort that your spouse has with this 3rd person and then explain what you want to do and why. If you have a good financial adviser you may want to inform him about this arrangement and create a comfort for him too. Ask the person if it is all right for you to share this info with them. Make the rules – can they talk to your adviser till something happens to you, do your children need to know that you know the financial details, is he at liberty to share details with your children, friends, etc. Remember, by sharing all this information you are asking them to take on a big responsibility maybe later on. They may be intimidated by the offer, it may take them a day to decide whether they want to do it. If is fine to put in a small remuneration – if the need arises, build it into your will.
Go through all of your information and make sure to answer their questions, if any. Explain the processes of how often you update your information, and where you store it. Then, ask if it would be all right to meet every 180 days or every year for a quick update. Ensure that you pay for travel, food, stay, if not give them a fee. It is also fine to go on a vacation with that person and use that as an opportunity for updating. Offer to be that ‘confidante’ for his finances – if it is appropriate.
Sharing financial information is a vital process but it could also be emotional. Choose who you share with carefully, very carefully, in fact.
Anybody who has done this already? How was the experience?
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