Designating a Successor Family Chief Financial Officer

by: Richard A. Anderson

Every couple has its own unique way of divvying up the household’s financial chores. This may mean one spouse is in charge of investments and one spouse is in charge of paying the bills, or one spouse could assume all the financial responsibilities. In the latter case, the responsible spouse effectively assumes the role of the family’s chief financial officer (CFO).

The designation of a family CFO can work well, until that person is no longer willing or able to perform their responsibilities. This could be the result of illness, incapacitation, death, or on a lighter note they are just tired of dealing with it. Without proper planning, any one of the aforementioned situations could leave the other spouse in a tough position. In the short term, the spouse is left to figure out what bills need to be paid and where funds are held. In the long term, the spouse needs to sort out portfolio management, estate planning, and potential sources of income.

The best way to avert a crisis is preparation. For example, most corporations have designated a successor who is trained and ready to assume the responsibilities should the CFO not be able to continue with his duties. The same situation should apply to a couple’s financial matters.

Critical in this process is transparency. Every couple should create and continuously update a list of assets and expenses. This is not only helpful for the surviving or healthy spouse, but also the executor or trustee of an estate. Dealing with the death or declining health of a loved one is difficult enough. Trying to determine which bills need to be paid and where they should be paid from is an added level of unnecessary stress.

A second valuable resource is the names and contact information of all the people who help manage your finances. This list should include financial advisors, accountants, estate attorneys, insurance agents, and personal bankers with knowledge of the family’s short- and long-term financial matters.

Of course, it’s difficult to contemplate the potential passing or illness of a loved, let alone yourself. Overcoming those emotions to develop a plan helps to ensure a spouse or family member is not left to scramble.

At HIGHLAND, part of our approach is to make sure both spouses are completely involved in the financial planning and investment management process. This isn’t to say one spouse won’t still be more involved than the other, but it helps to smooth the transition to a new family CFO if the time comes.

In addition, we also work with your accountant and estate attorney so that we can all be up-to-date on important issues should an illness or passing occur. The final, and perhaps most important piece, is getting family involved. It can often be difficult to discuss family finances with children or beneficiaries, but we can help facilitate those tough conversations.

If you would like to learn more about developing a strategy to designate a successor family CFO, or how we help facilitate tough family financial conversation, please contact a member of the HIGHLAND team.