Ben Stein How Not to Ruin Your Life

A few days ago, my wife and I were on a long flight from Paris to Los Angeles. We ate and read and talked for awhile, and then my wife fell asleep. I looked at her perfect profile for a long time and thought about how much I love her.

We've been together for close to 40 years, off and on, and she's my heart's companion. Then I thought of something that worried me.

A Knowledge Gap

My wife is a lawyer. She used to do immense studio deals for Paramount Pictures. She arranged co-financings in the range of hundreds of millions of dollars. But she knows absolutely nothing about personal finance.

I'm entirely certain she doesn't know the difference between an ETF and a mutual fund. I'm also certain she doesn't know the difference between tax-deferred savings vehicles and ordinary investment accounts.

Most of all, I'm sure she doesn't know how much we live on, or how she would arrange our assets in the event that I predecease her so that she would have enough to live on comfortably.

Letter of Intent

This isn't a knock on women. I know a number of men whose wives are the major breadwinners in the family.

These men basically can't tell the difference between a deferred annuity and a soccer ball, and would rather down another beer than look at a financial statement. Their wives take care of such things.

The fact is that in many marriages and living arrangements, there are usually the ones who take care of the money and the ones who don't.

In my marriage, I'm the one who takes care of the money. So it dawned on me that I should write my wife a letter and discuss it with her now, when I'm still very much alive (or at least sort of alive), to answer her questions about our finances.

Income Sensitive

The letter should lay out for her how much we have in the way of assets, and what form (stocks, mutual funds, ETFs, bonds, cash) and which brokerages (Merrill Lynch, Fidelity, Fiserv, Vanguard, Seidler, and many others) they're in. It should also list our bank accounts, CDs, variable annuities, life insurance policies, and real estate assets.

We're currently somewhat overweighted in real estate -- not because I bought it with a view toward investing in real estate, but because I love houses. So my wife should know how much we owe, if anything, on various properties; which ones I would advise her to keep and which ones to sell; and whether she should refinance if rates fall.

Then I should tell her how to redeploy those assets so that she would get maximum income from them instead of capital gains, because -- I assure you -- she will need a lot of income on which to live. (My wife hates to shop, except when it comes to cars, jewelry, and travel.)

Advise and Consent

Where should the income come from? Should she be in annuities (yes, in part), in real estate investment trusts (again, yes), in long-term bonds (probably not), or in short-term CDs (probably yes)?

I want her to be able to get the level of income she needs, with a likelihood that she'll have a bit of a protective cushion to reinvest in the case of likely inflation and higher living costs. This will take some doing, but it can be done.

I also want to designate a person, and maybe two, to be her advisors on finance. One will have to be my dear friend Phil DeMuth, who's not only my co-author in our many book projects (he actually does most of the writing) but also a darned good financial advisor who's utterly trustworthy.

The other advisor would probably be my longtime broker at Merrill Lynch, Kevin Hanley, who is likewise a good friend and extremely reliable and knowledgeable about finance. I would like to have these men backstop and even second-guess each other more or less constantly after I'm gone or incapacitated.

Final Steps

My wife should also know about my pensions. I'm lucky enough to have four of them from various entertainment business unions and from Social Security, and their payments are a meaningful sum (at least to us).

She should know how to activate them and start getting the checks when I would've reached 65, or if I do reach 65 before I die.

Then we should probably make a plan to keep her expenses in some sensible shape and match them to her likely income.

In the Line of Duty

Once I finished this letter, I would feel that I'd done a good day's work. My wife, that saintly creature who's put up with so much from me over the decades, would have at least an idea of how to get by while I'm waiting for her in eternity.

I hope and pray it won't come for a long time, but the day will almost surely come, and it would be irresponsible of me not to make sure she (and the dogs and cats and our son) are well-informed. It's the least I can for someone who's been so forgiving and so kind to me since way back when Lyndon Johnson was president.

Would writing such a letter work for you? Why wouldn't it? Why would you not want the person who cares most about you in the world to be able to get by comfortably, with the most knowledge you can give him or her? I'd say it's not only a good idea, but a duty.