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Getting your hands on financial information(and potentially save yourself some costs)…

February 23, 2011

Last year, I had the opportunity to hear Kim Kiyosaki speak. Kim is the wife of Robert Kiyosaki who you may know of as the author of Rich Dad, Poor Dad. More than this, Kim is wealthy in her own right (ie not through Robert’s bank account!) and is a savvy author and public speaker on financial issues. The way Kim tells it, she always knew independence was important to her if she married and when she met Robert, he was clear he wanted an independent wife. His first gift to her was not a diamond necklace but accounting classes. I am picking the logic for this can be found in the old “teach a man to fish” adage.

Kim reminded her audience of a few hard facts around what tends to happens to women financially upon separation, divorce or the death of their spouse. Statistics generally point to a woman’s income and living standards dropping after separation while their male counterpart’s often increases.  Kiyosaki’s message for women is that they need to avoid the possibility of this by becoming financially empowered and creating their own independent wealth. I can hear many of you saying that this is impossible for you. That raises a whole different blog topic!

What Kiyosaki really got me thinking about is what practical steps both men and women can take to minimise the adverse financial effects of a separation or the death of a spouse. I believe the starting point to this is to get informed about your relationship finances. Being informed about your finances is likely to reduce the stress and costs of having to suddenly get information upon a separation or death and means you are less likely to receive any nasty surprises about the true nature of your finances. A frustrating hunt for financial information where the other party is not cooperative about disclosing information can result in significant legal cost to you. Where possible, you can save yourself from this additional cost by sourcing the information in advance.

Of my clients, women predominantly feature as the financially under-informed party but I have also had a number of male clients who have had little idea what their relationship finances look like. The reasons my clients have given to me for their lack of financial knowledge are varied and have included variations of the following:

  • “It’s easier to let my husband look after the finances because I’m too busy trying to hold down a job, raise the kids and maintain the house”;
  • “My wife is better than me at managing the money and understanding things of a financial nature”;
  • “My role is to look after the kids while he looks after the finances. That’s how we divide up our responsibilities”;
  • “I’m a spender whereas my wife is good at saving and looking after our money”;
  • “My partner is violent. He won’t let me have a cashflow card or internet banking. I have learned to go along with this rather than rock the boat and risk him lashing out at me”;
  • “My partner thinks that he knows best and that it is his job to provide. The trouble is if I try to get information about our finances, he gets angry and tells me everything is his and that I’m entitled to nothing. He puts everything in his name or into his trust and never lets me come to lawyer’s or accountant’s meetings”. 

Do any of these sound familiar? All of these reasons are valid and many are symptoms of a deeper, more pervasive issue within the relationship which, in some cases, has led to the end of the relationship.

Yes, your partner may be better at understanding the finances and you may be far too busy with all your other responsibilities. But being financially informed does not mean you have to manage every aspect of your finances. Being financially informed can be as simple as making sure that if a snapshot was taken of your finances today, you’d know what that picture generally looks like.

So, what can you do to get financially informed? Here are some things my clients have tried:

  • Don’t underestimate the knowledge you do have. This is a great starting point. You know whether you rent your home or own it, you know which bank you bank with, you know what job you and your partner do, you may have heard your partner talk with others about the Family Trust or business matters – what was said?, you’re likely to be aware of how your partner is feeling her or his business is going, you may collect the mail in and may have seen bank statements arrive along with other mail about credit cards, loans, company dividends, insurances or other investments. This is all valuable information.
  • Obvious as it may seem, some of my clients have found frank and open discussion about this issue has worked. If there is a history of violence in your relationship, this may not likely be a safe option for you. If you are able to attempt a discussion, pick your time carefully and be aware that your partner could find this threatening or interpret it as a criticism of how they’ve handled the finances. One client found her partner had a “lightbulb moment” when she pointed out the repercussions for her and their children if he died without her knowing how their finances were organised and the extra stress this would put on her; 
  • Request information from the lawyer or accountant who completes work for the family company or Trust. If you are a director or shareholder of a company you and your partner have or if you are a Trustee of a Family Trust, this will give you some legal rights to back up your requests for information. A couple of my clients began insisting on attending appointments their partner had with their lawyer or accountant and they made sure they asked questions about anything they didn’t understand.
  • Personally, I handle the day-to-day details of our household finances but while my partner is involved in the bigger decision making, he doesn’t know a lot of the detail. Should I die, he’d be faced with the stress of having to work it all out. So, I made up a list (which I update a few times a year) of all our accounts, credit facilities, insurances and investments with key account numbers, balances and contact people and contact numbers and I’ve made sure he knows where to find this and where other key documents, including our Wills and Powers of Attorney, are kept.
  • Go online. There is a wealth of information about financial matters on the web. The Sorted website is a good, NZ site (www.sorted.org.nz). Likewise, the Companies Office website allows you to search for free to see what company directorships or shareholdings you or your partner have (www.companies.govt.nz).
  • Talk to your Bank. Chances are that even though your partner controls the finances, there is likely to be some accounts and credit cards, loans or mortgages in your joint names. This means your Bank legally has to provide you with information about those accounts or lending facilities that you are named on. My clients are often surprised how much information they can obtain this way. Copies of loan applications made to Banks often provide a wealth of information.
  • You may not feel able to discuss such matters with your partner at all and there may be good reason to gain the information surreptitiously. Some of my clients have gone through the household’s paperwork and taken copies of those documents. They have then later gone through their findings with either a financially savvy friend or their lawyer.

So, while Kiyosaki’s goal of independent wealth may seem impossible to a lot of us, one thing is for certain – you will never get there and in fact, may be only a separation or death away from moving further from it, if you don’t get financially informed.

If you want  help with a family law issue, go to www.familylawresults.co.nz.

One Comment
  1. vicky permalink

    My husband is seeing another women. It has become serious and he has asked me to move from our home so that she can move in? I have put 20 years into my home and garden and it would literally kill me to have someone else move into my home. Do I have the right to hold my ground and stay there? I have said that if he wants a new life with someone else than he should go. Why should he have his cake and eat it too?

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