Congratulations! You are getting married. Now you may feel what other couples would have felt whose marriages you have attended. You are starting a new life; excitement and joy have flooded inside you. Marriage is not all about romance; it brings many responsibilities too. Before you take vows, you should discuss finances especially when one of the partners has significant wealth and children from previous marriage.
Getting marriage can also be financially beneficial as you can share wealth and debt, but as a couple, you must be clear with financial expectations before you start your relationship. Over a few years, many marriages have ended through divorce. In some cases, the situation was so worse that both the partner argued over who would pay off loans in Ireland that they took out to finance their marriage. Here is how you can protect your assets:
Converse with your partner
Sit down and start an honest conversation about budget, debt, lifestyle, children, retirement, goals, plans and the like. You will probably not discuss all phases of life or your partner is not likely to agree upon what you propose, but this discussion will at least help you have an idea about your partner’s perspective toward finances. For instance, opening a joint account can be a horrifying experience if your partner does not care about borrowing for a better lifestyle.
Take guidance from a financial counsellor. Any joint account will require a lender to peruse the credit report of yours and your spouse. If your partner’s credit report shows high default risk, you may likely be tempted to take on the financial responsibility. Before you take any step, always remember that you will be entirely responsible for settling the debt even if you have parted.
For a successful marriage, you have to be honest with your spouse. Discuss your loans that you currently owe. Ideally, your spouse is not legally bond to pay off what you owed before marriage but can contribute to payment. It is important that your spouse does not get surprises after marriage that may take a toll on your relationship.
Even if you open a joint account to hold funds that you own after marriage, do not mix them with premarital funds. Since starting you should be organised with your money. If you receive any monetary benefit or gift, you must keep it separately. Make sure that you do not add further contribution to that account because you will have to prove it how much you added to it at the time of divorce.
Joint account can also raise an issue at the time of separation if you have not been consistent with your contribution. For instance, you and your partner decide to transfer equal share to the joint account and eventually your spouse loses the job. Unless your partner lands a new job, you continue to add up the balance. You should have a record when and how much money you put in the account. Otherwise, you are likely to get only half of the balance due to lack of evidence.
Some couples treat prenuptial agreement very negatively, but this may ease the pressure off your shoulder and you will be able to live your life with more peace and calm. It is important that you and your partner both agree to the contract. Make sure that you have your own attorneys and you know what is listed in the agreement before signing it. Prenuptial agreement plays a crucial role when you have children from your previous marriage. Having mentioned estate in the agreement makes sure that that will pass on to your children not your spouse. However, you do not need to emphasise it if you do not have kids from your ex-marriage.
Do not ignore property appreciation
Any appreciation in premarital property post marriage is considered marital property and hence your spouse has the right to claim that money provided the appreciation is active. Some of the properties cause passive appreciation like increased value of public stock. For instance, you have bought some exchange before your marriage of which prices increased after your marriage. The increased amount will be totally yours because you did not make any effort to increase their value. Unlike passive appreciation, active appreciation requires your efforts. This is more common in case of house. For instance, you have a property of which prices increased as you have got it refurbished, the increased value will be marital property even though your spouse was not involved in it.
Financial planning before wedding may seem to be very monotonous and tiring, but it is important that you know about spending habit and financial goals beforehand. Monetary problems and poor money management skills often lead to divorce. You can stop these precursors from ruining your relationship if you have tied emotional as well as financial knot with your partner.