Tips for taking over the responsibility of managing your household finances


Assuming responsibility for managing household finances can intimidating for a partner who hasn’t been involved in making financial decisions. Vanguard investing experts Kahlilah Dowe and Maria Bruno say those that find themselves in this situation shouldn’t be afraid to ask for help.

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Notes:
All investing is subject to risk, including the possible loss of principal.

Vanguard Asset Management Services are provided by Vanguard National Trust Company, which is a federally chartered, limited-purpose trust company operated under the supervision of the Office of the Comptroller of the Currency.

Advisory services are provided by Vanguard Advisers, Inc. (VAI), and registered investment advisor.


TRANSCRIPT

Beth Orton: Yeah and a different life event, but you know along the same lines, we had a question from Jean in San Antonio, suggestions for widows who have never before taken an active role in managing the household finances. So you know sadly you know one partner does pass away, what can that person do who really wasn’t involved, wasn’t involved in the planning, wasn’t involved ahead of time, but now finds herself in that situation where she has to take on this responsibility.

Kahlilah Dowe: Yeah another tough one. I would say the first thing is one of the things I found is that you know when a widow will find herself in that situation often times there’s embarrassment that you know I didn’t get involved, and I always wanted to kind of speak up and say that I wanted to be involved and I never did. And so the first thing I would say is don’t be afraid to ask for help. There’s nothing to be embarrassed about. I think there are great resources, Vanguard. That’s one of the things that we do as advisors is to kind of help you. And the first thing that I look at in that type of situation is kind of assuring them that they’re going to be okay. From a financial perspective. Because the number one question that I get is, do I need to cut back? Do I need to cut back on what I’m spending? Do I need to sell my home? What do I need to do now? And so the first thing that I look at is whether or not they’re on track. Can they continue to live the lifestyle that they live right now? The other thing I would say is you don’t have to understand everything today, you know. It’s – I can understand the drive to kind of want to know everything that’s going on and kind of get a grasp of it.

Beth Orton: Grasp of it—

Kahlilah Dowe: Right. Exactly. But I would say kind of take your time. Understand where you are right now. I think an advisor is great in starting out with that. And then the other thing I would say is, usually the investment part of it is really difficult because when you’re investing there’s always the risk that you could lose money. And so often times, I’ll speak with investors who will say I don’t want to lose anything. I need to hold on to everything that I have. And so I think that’s where you really need to have someone kind of step in and kind of re-evaluate. I think that that’s a big part also. You know something like that happens, is unfortunate, but you have to kind of re-evaluate. Okay now this is your portfolio, what is it that you need this money to do for you, who are going to be your beneficiaries, how comfortable are you, those are some of the questions that you have to answer. And I think again an advisor is going to probably be your first step.

Beth Orton: Yeah. So this is a related question, Maria maybe I’ll turn it to you. Another one that came in earlier, Keith from Orlando, Florida. So what can you do to make it easy for a spouse who has taken over managing the finances when they aren’t financially inclined? How can Vanguard help when the main person who has handled all of the finances has died? So we may talk about trusts a little bit or something like that?

Maria Bruno: Yeah I mean certainly you know if you can have the proper planning in advance, and that certainly will be the legal documents, making sure you’ve got the beneficiaries aligned the way you want them to. Trusts, and there’s different types of trusts, can help with some of that when one spouse or partner passes away, because again the assets are managed based upon the terms of the trust, and then as an income beneficiary with, for instance, the surviving spouse or partner then can have the lifestyle and access to those funds. But it’s professionally managed potentially by Vanguard or a fiduciary . . .

Beth Orton: And first transition is fairly easily.

Maria Bruno: Absolutely right. So the financial institution can certainly help through that. And it’s all outlined in terms of the document and there’s all different types of trusts. So you know certainly as part of an estate plan someone needs to go through these considerations to find out whether a revocable trust or an irrevocable trust. And that the terms of the trust are outlined. That is a step that certainly every individual or every couple should go through. So certainly if you can do that in advance that certainly would have the security and the financial foundation for the surviving spouse subsequently . . .

Beth Orton: Yeah and Vanguard—Keith did ask what Vanguard can do to help. And Vanguard does have a nationally registered trust company. So the document that a—that someone sets forth, husband and wife, and says if the person passes it goes into the trust company, there’s a trust manager that’s assigned somebody who will take over that relationship. And in many cases you can talk on the phone to people ahead of time. So your surviving spouse can be comfortable with Vanguard when they may not have been involved with us heretofore.

Maria Bruno: Right so there’s different ways that Vanguard can assist corporate trustee, or as an investment of the—or managing the investments of the—l;to the terms of the trust. So yeah I would be—I would encourage anyone to give us a call. And then you could speak with one of our associates or one of our financial planners to kind of walk through this and okay here are the things that you can think about. Here are the things to help you have a better discussion when you go talk to an attorney to help figure out in terms of whether a trust is appropriate and what type of trust.

Beth Orton: Yeah and in some cases that trust can also be sort of manager directed by a family member, maybe you know an elder child or something like that Vanguard helps out with the investments. So there’s a variety of different ways to sort of make that a seamless transition for someone who&’s not been very involved in the finances. Right.

Important information
All investing is subject to risk, including the possible loss of principal.

Vanguard Asset Management Services are provided by Vanguard National Trust Company, which is a federally chartered, limited-purpose trust company operated under the supervision of the Office of the Comptroller of the Currency.

Advisory services are provided by Vanguard Advisers, Inc. (VAI), and registered investment advisor.

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