The Worst Mother’s Day Gift
Our mothers have such an important role in all our lives. They tirelessly care for us from infancy to adulthood, usually sacrificing the things they want to do or have for us. The job of a mother is a 24/7, 365, round-the-clock responsibility, and yet they still manage to show love and compassion along the way.
In return, we celebrate all mothers on Mother’s Day, each year. It’s the time to tell them how thankful we are for them and also how much we love them. We do this for our mothers, but also for our wives, who are mothers to our children. And while there are many things to consider gifting your wife for Mother’s Day, there is one thing you should avoid “gifting” to her, and that is an incomplete or disorganized financial plan.
See, as husbands, we often don’t think about what life could be like for our wives if we were not around. In most households, it seems there is one primary decision maker when it comes to financial information. In this way, a marriage can serve as a partnership, where one person handles certain things (finances, bills, etc.), and the other handles other things. While more and more women are handling the finances in the household, there are still many households where the husband is the primary decision maker on financial matters.
With that said, I’ve seen several examples of men who are unintentionally setting their wives up for failure regarding their financial plan.
As we celebrate Mother’s Day this year, consider the following situations as things you don’t want to give your wife this Mother’s Day.
A Disorganized Financial Plan
A disorganized financial plan can come in many shapes and sizes. However, the most drastic occurrence is when a husband and wife simply have no plan at all. Maybe it’s because you haven’t talked about your goals, your retirement strategy, your tax situation, or your estate plan, etc. Regardless of how you find yourself in this situation, you can take the initiative and start getting organized for your family.
Have you talked about what you or your wife would expect your lifestyle to be like if one of you passes away? It can help to have a serious conversation about what to expect if one of you becomes deceased. If you’re not on the same page, it can be detrimental to the long-term success of you or your spouse. For example, if you are assuming that upon your death, your spouse will sell your house and cut expenses by 50%, but your spouse assumes she can continue to keep her living expenses the same as when you were living, that would be a recipe for disaster down the road.
No Relationship with Your Team of Professionals
Because many households have a primary person that manages the finances, that can also lead to just one person communicating with the financial advisor, accountant, attorney, insurance agent, etc. Therefore, one person has a good understanding of what’s going on, but the other is completely clueless. Not to mention, the spouse not meeting with these professionals hasn’t had the opportunity to build a relationship and develop trust.
Why is that important? If your spouse knows and trusts the professionals you’re working with, it can greatly reduce the amount of stress during the time after the first spouse passes. While it’s not always the husband that passes away first, women are still living longer than men, statistically speaking, so it is more common to see wives outliving their husbands.1
Therefore, make sure your spouse knows the people you’re working with if you currently have a team of professionals.
No Team, No Succession Plan
Also, what if you manage your own finances and don’t have a team? Does your spouse know who to turn to once you’re gone? Does she know how to evaluate the advisors she’ll have to interview? Does she know what questions to ask and what to look for? In many cases, if your spouse does not handle your finances, the answer is usually “no” to all of the questions above.
This is incredibly important for those of you that manage your own investments, file your own taxes, etc. While the financial industry is trying to clean up its act with increased focus on a fiduciary standard for all types of advisors, not much has actually changed at this point. This could lead to your spouse being sold a financial product that is not in her best interest.
If you are a financial do-it-yourselfer, you may consider engaging an advisor now so that you have a good succession plan in place. You can also give your spouse the names of a few advisors that you think would be a good fit, or things your spouse should look for in an advisor, accountant, etc.
Not Enough Life Insurance
While life insurance can be a great tool to protect against liabilities left for the surviving spouse, that isn’t all it does. In some cases, life insurance might be needed to replace a portion of income. If you and your spouse are collecting Social Security benefits and you pass away, your spouse will not be able to continue collecting both benefits. Therefore, a portion of income will immediately go away.
Additionally, if you were receiving pension distributions, but had no survivorship benefits, or partial survivor benefits, your spouse would lose even more income at your death. And while expenses would also be expected to decrease, there could still be a shortage between income and expenses after the death of the first spouse. Although it’s not needed in every instance, this is an example of when life insurance is a valuable and necessary tool.
As you can see, it can be easy to leave your spouse in a difficult situation if you don’t utilize proper planning. If you are in a situation where your spouse is “in the dark” where your financial plan is concerned, or if you have no financial plan, you should consider the points above. I certainly would not recommend fully substituting the flowers, jewelry, or other gifts you may have planned on giving this Mother’s Day, but perhaps you can address the items above as an intentional supplement to those more traditional Mother’s Day gifts.