Until Death Do Us Part

Jacqueline Combs

At the altar, you make hopeful and sincere vows to love and cherish each other until death do you part. Your goals for your long and successful marriage include many milestones: opening your first joint savings account, buying your first home, having a child, getting a dog for your child, having another child…another dog…travel and adventure…planning for a comfortable retirement. Then, out of nowhere, you get an unexpected and devastating phone call. Your spouse of 15 years has dropped dead of a heart attack. An emotionally jolting, dark cloud descends.

As you start to pick up the pieces of your life and shield your children from the unknown, the financial setback of your loss begins to set in. You remember your spouse had a life insurance policy, but can’t remember the name of insurance company or where the policy is located. While your life turns upside down both emotionally and financially, you turn the house upside down to find the vital information you need to move on. Where is the list of user names and passwords for your bank accounts and investments? What is the name of the financial planner we saw? Are the pink slips for the cars and deed to the house in the safe deposit box? Where are the keys to the safe deposit box? If only you had sat down together to get organized.

It makes you think: what vows do you promise to keep if death does part you and your spouse?

Imagine if your bank froze your assets because the only person with the combination to the vault had died. Incredibly, in a widely reported case earlier this year, the wife of the CEO and co-founder of a Canadian crypto-currency exchange (along with the company’s investors) found herself in exactly that position. This CEO, who died unexpectedly while traveling in India in December 2018, was the sole keeper of the password to accounts valued at $190 million in U.S. dollars. Forced to file for creditor protection with the Supreme Court of Nova Scotia, his widow said his death left the company unable to access the bulk of its cryptocurrency funds.

While your individual portfolio might not include cryptocurrency investments, this is a cautionary tale for every married couple. Complete transparency during the marriage is the key to not leaving your family in a lurch. As unpleasant as it may be to think about, and as difficult as it may seem to find an extra hour to put together, organizing your family’s financial life benefits you now and in the future. It is a way for you to minimize the financial agony your spouse and children may face after your death. It may also prompt important financial discussions to have now with your partner, as uncomfortable or unromantic as they may seem at first. At the very least, this process will give you a clear picture of your financial wellbeing.

There are dozens of workbooks and resources for organizing available in print and online. No matter which one you select, this process will educate both you and your spouse about each other’s finances and records. Start by compiling a complete list of passwords. Take some extra time while you’re focused to identify all your assets and liabilities (those in your name, your spouse’s name, jointly held), and note when and how these assets were acquired. List your family’s insurance coverage (medical, dental, property, auto, life, umbrella) and take steps to fill in any coverage gaps you may find. Talk about making an estate plan if you haven’t already, or updating the one you have—including medical directives for each of you.

While all of this may take you away from Sunday football or Tuesday night Real Housewives, consider the long-term benefits that your short-term sacrifice will have for those you love and cherish.

As Wedding Season Approaches, It’s Prenup Season

 Stacy D. Phillips

As the summer wedding season approaches, so does “prenup season.” Often, the mere mention of a prenuptial agreement (prenup) makes people uncomfortable, as if these documents and the discussions they prompt constitute a wholly unromantic anticipation of ultimate failure—even before the couple share their first dance.

High-net-worth individuals need to protect their financial interests before marriage. A carefully considered, well-crafted prenup is an insurance policy of sorts, should the marriage not work out as everyone hopes.

Here are some scenarios we see frequently in our practice that indicate the vital importance of a prenup:

  • When an individual has children from a prior marriage, to ensure that they are taken care of in the event of divorce or death during a subsequent marriage.
  • When an individual’s family has substantial wealth, to ensure that separate funds used during the marriage to purchase a home, vacation property, fine art, or other valuable assets remain their separate property (unless there is a written intention to gift it to the marital estate/community property).

What is the right time to discuss and sign a prenup? As early as possible before the wedding. Neither party should feel pressured to sign something on the eve of the wedding. Moreover, prenup discussions can bring out issues between couples that need to be addressed, perhaps even in pre-marital counseling. At its extreme, this process can make both parties reassess their readiness to marry each other. At its best, these discussions provide a forum that forces couples to work through the practical aspects of marriage: managing money, raising children, allocating responsibilities of income earners and caregivers, and possible religious differences.

While there are no one-size-fits-all agreements, here are a few cautionary aspects essential to every prenup:

  • Each party should be separately represented by an experienced matrimonial/family law attorney or estate planning attorney. Attorneys who practice in the divorce realm, however, offer an added advantage: they understand the detritus of failed marriages, so they write prenups defensively.
  • The ultimate goal is to have a clear picture of what happens in death or divorce. If the agreement is too complicated or too vague, it won’t serve its purpose.
  • There must be financial disclosure of assets and income of both parties.
  • A spouse who is successful in securing a prenup that is punitive also runs the risk of having that agreement successfully attacked in the future.
  • Be protective. Be fair. Don’t be greedy.

Prenups can prevent not only divorce battles but estate battles as well. After all, it is the peaceful resolution of family matters that matters most.