There may be nothing as difficult as having to tell your spouse or partner that you are no longer comfortable with him or her handling your finances. But if the time comes, as uncomfortable as it may be, that talk may be critical to the safety of your retirement nest egg. But when is it time to fire your spouse as money manager?

Darling….You’re Fired

There are several scenarios where that talk with your spouse may be necessary.

Your partner is beginning to show signs of diminished capacity.

“Whether you want to call it dementia or just starting to get so old, – they’re just getting forgetful,” says Mike Piershale, President of Piershale Financial Group in Barrington, Illinois. When to worry? “When you start seeing some signs that usually carry over into other areas of their life, like if you see that they’re starting to have some memory loss, for example,” he says.

Be observant, says Ric Edelman, author, radio host and founder of Edelman Financial Engines. “A lack of interest in managing the money, any sort of change of behavior or attitude is a warning sign that there may be diminished capacity,” Edelman warns. He points out these warning signs:

• Bills aren’t being paid on time the way they used to;
• Repeated errors;
• An inability to correctly write a check (failing to sign or put in the date correctly).

If you get resistance, you will need to discreetly provide oversight, Edelman says, and check that bills are being paid and accounts are being handled properly.

Diminished capacity is also where the importance of powers of attorney are key. The ideal scenario is that you will have the documents in place in advance, Edelman notes. “If your spouse or partner becomes medically unable to manage their finances, you have the legal authority to do so on their behalf. Even if there’s a bank account in their name only, you would have the ability to make deposits and withdrawals for that bank account.”

If, he warns, they become incapacitated and you don’t have powers of attorney in place, you are faced with a difficult situation.

Powers of attorney have to be obtained in advance. If not, and you are facing the situation where the individual is incompetent or incapacitated, you would need to obtain guardianship, via a court order, Edelman points out. “That is an extreme action, because you are stripping away the legal rights of the individual. And this must be done very carefully, with the aid of other family members and legal counsel as a financial advisor.”

Your partner isn’t suffering from diminished capacities, but is just is doing a poor job

You need to have a conversation, Edelman says. “It could very well be simply a matter of burnout. Very often, spouses split the family chores. One might handle the family finances while another handles other chores in the household. After a period of time, maybe weeks, maybe decades, it’s easy for someone to get tired of the chores they were doing.”

In that case, Edelman suggests, “It is entirely appropriate for each of you to speak up and to say that you would like to shift the burden, and you would like the other to engage more in one area and less than another. That’s part of a relationship. And it’s important to have open communication.”

Your partner is taking too much risk

“You may have a spouse that is just extremely aggressive with the way they’re managing money,” Piershale observes. “There are people out there in retirement who have a lot of their life savings, money that they need for income, invested in Apple, Google and Facebook. Those stocks have done really well, but they’re high risk.”

“I’ve seen spouses just constantly stressed out by another spouse’s aggression in the way they’re managing a portfolio when they’ve had no training,” Piershale continues. “They’re kind of on this roller coaster where once something will backfire and they’ll end up really losing part of the portfolio and other times they are doing really well.”

That’s when you have to have a conversation with them about getting an outside person to manage the investments, Piershale says. “Sometimes I feel like I’m more of a marriage counselor, than I am a financial counselor It gets a little awkward.”

Rodney A. Brooks writes about retirement and personal finance issues. His column currently runs in U.S. News & World Report. He has written columns on retirement for The Washington Post and USA TODAY. He has also written for National Geographic, Next Avenue and Black Enterprise magazine. He retired as Deputy Managing Editor/Personal Finance and retirement columnist for USA TODAY in 2015. 

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