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Relationship with money
Ambareen Musa reveals five steps every couple should take.
September 26, 2013 9:11 by kippreport
It is best to ensure that both husband and wife are fully aware of each other’s financial affairs. After all, what happens if one party dies and the other has no idea what savings, if any, are in place?
In every marriage, each half of the partnership brings different skills to the table. While one might offer creative skills that can rustle up a fabulous feast for a dinner party, the other might deliver a more methodical approach to a marriage that might include taking the reins of all financial affairs.
While in a marriage it is very normal for one half of the couple to take charge of the finances, it is also important that both know exactly what investments, savings and insurance plans are in place. Why? Because it’s vital that both parties are fully up to speed in the event of death; nothing is more tragic after a spouse dies than not knowing what to do financially.
With that in mind, here are five steps to ensure that both husband and wife are fully aware of the family’s financial affairs:
Make a will
This is probably the most important thing a couple can do during their marriage, particularly if they have children. You want to ensure that all of your assets go to your spouse and, if the worse happens and you both die, that your wealth is automatically passed on to your children. That should answer the question of why you need a will.
For expatriates, it is wise to have a will here in the UAE and to make sure that not only your spouse knows where it is – but also a lawyer or close family member. Those without a will could be subject to shari’a law, which treats men and women very differently. If a woman dies, all her assets are passed onto her husband, but if a man dies his assets might be passed onto the closest male relative. This is why a properly written will is important as the courts generally respect it.
Get a life insurance policy
For couples that both work, it is wise to get a joint policy that pays out in the event of either spouse, or both, dying. The biggest issue here is deciding how much your dependents will need in the event of your death. Choosing a value depends on factors such as how much debt you have, what your income is and how much you will need to replace it and any future obligations, such as a child’s schooling or higher education. A good financial adviser will help you calculate the right amount for your needs.
Make a wealth list
The person who manages the finances in your marriage should compile a document that lists all the wealth the couple has and where it is stored. This list needs to be in a hard copy format and kept somewhere secret that both of you know. This document must include all passwords to online accounts to ensure your spouse can get access to these accounts in the event of death. An online legacy can be the hardest to get access to so making sure both parties can log in is key. If you have a financial adviser handling investments and a lawyer handling a will, make sure their contacts are listed too.
Have an emergency fund
Having a pot of cash ready in the event of an emergency is important and, of course, the death of a spouse falls into that category. When someone dies, it can be difficult to access a joint account or the account of the deceased while legal issues are under process. With this in mind, it is wise to have a pot of cash stored that is easily accessed by both parties, or, even better, for each spouse to have a separate emergency fund. Where you store that money is up to you; sensible suggestions include an offshore bank account, a savings account or a savings scheme such as National Bonds – but the key is to ensure both parties can easily access cash in the event of a tragedy.
Hold monthly financial meetings
While this may be a bore for some couples, especially those not particularly interested in the financial side of life, it is a vital way to make sure everyone knows where the wealth is stored and how it is accessed. It’s also important that both parties are on board with how their wealth is being invested. The last thing anyone wants is to lose a spouse and then find that they invested the family money in a way you do not like. By both taking a keen interest in your financial affairs, it means you can both be instantly independent if tragedy strikes.
By Ambareen Musa, founder of Souqalmal