Part two: survival planning for relationships in cases of divorce, becoming a widow/widower, partner incapacitation situations and just plain relationship common sense.

Readers, you should know that I often use case examples to explain concepts and situations. All personal information is kept confidential while places, circumstances and individual identities are changed to protect privacy.

We all understand that a divorce, death of a partner or an individual serious incapacitation situation in a relationship can be emotionally and financially devastating for both parties, but particularly for ladies.

I have always recommended that individuals have some sort of a contingency plan – and here is my caveat – plan at the beginning of the relationship, not the end.

No matter the format: marriage, partners, common-law, uncommitted live-ins, it is incredibly important. Better to know exactly where you stand: it means feeling comfortable relative to both of your family financial positions. The last thing you want during times of great emotional stress is to be searching for records to figure out where you stand financially.

Am I being cynical? Yes!

Too practical? Yes!

Protective? Yes!

Protect yourself: you have not seen what I have seen, particularly with respect to assets brought into, derived from an event, or inherited in the relationship. When you love and trust your partner, it is always assumed that owning everything jointly is often the most expedient solution.

Nevertheless, life does happen. People change. Partnerships dissolve. Transparency goes out the window. The love of one’s life passes prematurely. Second marriages occur. Children’s needs become primary. Accounts can be hacked. And regrettably, sometimes, one partner is a self-serving, mercenary individual with ulterior motives, including financial theft.

In one discouraging case long ago, our lady client had recently become severely handicapped by an industrial accident. She came to our office for financial planning, a perquisite for receiving a very large insurance settlement.

She would no longer be able to work, her memory and day-to-day activities had become quite limited. She seemed unable to grasp that the amount of the award, while large to her, was finite – and nowhere near enough to support her through old age as an increasingly disabled individual.

Accompanying her was a very new husband who immediately launched into the things they would acquire, trips they would be embarking on, and renovations that they were going to do with this windfall.

We made our independent realistic recommendations in order to carefully manage this windfall to protect her and her children’s financial future. She ignored them all, stating that new hubby had power of attorney over her affairs and he knew what he was doing.

He did not understand, it appeared, any financial concepts at all. Further, he sabotaged every financial strategy we discussed and she agreed with his vision of her future.

Regrettably, we terminated the relationship as we could not be responsible for her lack of planning going forward. I often wondered what happened to her, but I think we know the answer. The money is gone.

Below is a suggested list, not all-inclusive, to ascertain and list who owns what, where everything is, how it is being reported, how it can be accessed, so that you can manage and keep your financial records current.

Cash: How are your cash and savings account titled? Make sure that any significant withdrawals or changes in the account require both signatures. Of course, you should jointly discuss account activity as well.

The old joint account labelled, for example, “Rose Smith or George Smith”, allowed withdrawals by one individual without the partner counter signature. This loophole was used conveniently by an expatriate in a marriage of convenience to a Bermudian individual.

Once a baby appeared on the scene, she emptied the family bank accounts and left the island. Shockingly, he realised she had left when his ATM withdrawal was declined.

Any overseas accounts?

Any transfers off island, such as alimony or child support elsewhere?

Any accounts pledged as collateral?

Lots of cash withdrawals?

Are parents providing additional support to one or both individuals? This can be a contentious wedge when, or if such monies are hoarded and do not benefit both parties.

Income, bonuses, salary, job skills: Do you know what each of you earn, and how/where it is deposited. Have you seen authentic payroll slips? Pension statements? Bonus cheques?

Generations before ours, it was traditionally accepted that the female in a marriage received a household budget allowance from the main bread-winner. Some ladies had absolutely no idea what the head of the house earned, saved, accrued in a pension, or was covered by life insurance or disability benefits. That still occurs in some cases today.

Are each of you consistently upgrading your on-job skills?

Debt: Credit cards, mortgage, car payments, personal loans, family loans, taxation debts and so on.

All credit card charges should be reviewed by both routinely online. One partner may be charged with paying the bill each month, but both partners should be cognizant of the payments and expense allocations, for communications purposes and to prevent hacking, so commonplace today.

Mortgage, car, personal or family loans should be checked on a routine basis – every few months – to ascertain that payments of interest and principal are applied correctly to assure that principal reductions are taking place.

Be extremely careful what you sign – where you are both jointly and severable liable for any debt. Be doubly sure no old debts are brought into the new relationship.

Stories abound in my practice of old debts carried, but not disclosed by one party in a new relationship, or omitted from release in a prior divorce. Years later when the prior spouse defaulted on the debt, the creditors in court demand payment from the other now remarried partner.

Taxation debts are almost a betrayal issue.

A client owned a successful business. She had remarried and both parties signed the next year’s joint tax return. After year end, the US Internal Revenue Service withheld her entire refund while assessing her penalties and interest on old tax debts. You guessed it – debts belonging to the new spouse.

Legally, on joint returns, both are liable, so US IRS levied her account. Further discovery showed that his first wife had been scammed as well. Guess how that scenario ended. Marriage over!

All this general advice may or may not be helpful, but at the end of the day, life is what it is. Any contingency planning for the future can only benefit both individuals involved in a relationship.

Part three: contingency list – to be continued in early May.

• Martha Harris Myron, CPA, CFP, JSM: Masters of Law — international tax and financial services. Dual citizen: Bermudian/US. Pondstraddler Life, financial perspectives for Bermuda islanders and their globally mobile connections on the Great Atlantic Pond. Personal finance columnist to The Royal Gazette. All proceeds earned from this column go to The Reading Clinic. Contact: martha.myron@gmail.com