Valentine's Day taboo: Real conversations about prenups, death and bank passwords

Valentine’s Day spotlights the many blessings of relationships – the love, the companionship, the happiness.

Then there’s this: The money.

Many couples have a tried-and-true way of dealing with the possibility of unpleasant events that can shake up their finances, like divorce, death and end-of-life care.

They ignore it.

Just 41% of middle-aged and older Americans have a financial plan in case of divorce or the death of a spouse, and just 6% have a prenuptial agreement, according to a TD Ameritrade survey whose results were provided exclusively to USA Today. It may also be surprising how few people share bank passwords.

The poll, of 2,000 Americans aged 40 to 79 with at least $25,000 in investable assets, was conducted by Harris Poll Aug. 30-Sept. 10.

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Planning for the ‘uncomfortable’

“People should be prepared for the uncomfortable sides in their lives,” says Keith Denerstein, director of investment products and guidance at TD Ameritrade. “It’s these events that can have a significant financial impact.”

Whether a couple has a prenuptial agreement is “an individual choice,” Denerstein says, conceding that some people feel such pacts can strain relationships and even torpedo wedding plans.

But, he adds, “Having a prenup adds some level of certainty” to financial futures. Couples who don’t have such contracts at least should plan for how their income and expenses will change if they get divorced.

Many couples find it difficult to talk about certain financial topics, such as death and divorce.

“Such agreements also “can be helpful to set expectations and decrease family tension during difficult times,” says Kalimah White, senior trust advisor at TD Wealth.

Forty-two percent of divorced Americans surveyed — including 70% of those with at least $250,000 in investable assets — say they would have a prenuptial agreement if they remarry. And nearly two in 10 say they would advise their younger self to get a prenup.

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Divorce can also upend retirement plans. Forty percent of those polled say divorce threw their retirement plans off course. And one-third say they delayed a divorce because of financial concerns.

“Divorce and retirement are, in many cases, intertwined,” Denerstein says. “Divorce can greatly impact the ability to reach retirement goals.”

Retirement has its own challenges. About one-third of middle-aged and older Americans say they’re very or somewhat unprepared if they or their partner retires earlier than planned. And nearly half don’t expect to retire at the same time as their spouse, usually because of age differences. Yet one in five in that group says they simply can’t afford to retire at the same time.

“That’s adding a level of complexity that people need to be mindful of,” Denerstein says of varying retirement timelines.

Guilt and death

End-of-life planning can be even thornier. Nearly half of those surveyed would feel guilty not leaving enough of an inheritance for their family, 42% are unsure of the best way to structure an inheritance and nearly one-third don’t know how to even discuss the issue with family members. The good news: At least half of Americans in their 40s have such anxieties but the share steadily declines as people reach their 70s.

But that doesn’t necessarily mean people are taking steps to deal with touchy matters.

Just 36% of those surveyed have shared financial passwords in case of emergency (though the figure rises to 44% for people with at least $250,000 in investable assets).

Forty percent have discussed funeral arrangements with their family. Thirty percent have set aside money for end-of-life care and a funeral. And 28% have created a plan in case something happens to the household’s primary financial decision-maker.

“The trepidation is understandable,” Denerstein says, “but preparing for these scenarios is important for financial security.”

“Without a plan in place, clients may see their assets distributed in a way that may not be consistent with their wishes,” says Greg Wilson, head of institutional client business at Ayco.

Tara O’Rourke Howard, 63, of Westborough, Massachusetts, erred on the side of caution. She and her now-deceased husband, John, didn’t draw up a prenup because they married young and had no assets. But after Tara gave birth to the first of three children at 35, the couple quickly drafted wills, health directives and other documents and took out life insurance policies.

They also shared all their money and bank passwords.

“We were both OCD,” she says. The extreme planning provided “peace of mind,” Howard says. It also made things easier when John passed away 14 years ago.

“You’re in the depths of grief, helping three children who were devastated,” she says. At least, she adds, “I didn’t worry about finances.”

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