Having those hard conversations early
According to some statistics, more than 50% of couples go into a marriage (or cohabitation situation) without having an in-depth financial discussion. I’m not talking about who is paying for what on a day to day basis, I am talking about the big stuff.
- How much debt are you bringing into the relationship? Full disclosure is imperative.
- How financially compatible are you? (Read HERE for more)
- How are you both going to saving for retirement? – I recommend it be equally split and if one partner has to take time off, to have or care for children for example, then the working partner should continue to pay into that retirement fund. On divorce your partner can claim up to 50% of the fund. When either of you moves job, call in your financial advisor to discuss the impact on your retirement fund and the alternatives.
- What marital regime will suit you best (see my recent blog HERE)?
- Don’t take shortcuts when listing your existing assets on your Ante Nuptial Contract. Include the current value of your retirement funds.
- If you’re going to inherit anything in the future, make sure your benefactor has a properly constructed will that removes the inheritance from the marital regime and that your ANC also excludes inheritances incase they don’t. In other words, anything you inherit irrespective of how you marry (ANC, Community of Property etc.), will always be yours. No sharing. If you do inherit after you marry, don’t mingle it with the family assets. This might be hard to do, but speak to your lawyer or financial advisor on how to do it.
- If you have children, how is child-care going to work?
- What impact is having children going to have on your respective careers, and how can this be balanced out?
- Draw up a monthly budget and allocate expenses. Do not abdicate the entire responsibility to one person, ever. If one is clueless, get them to invest in some sessions with a financial coach.
- Start a joint ‘rainy day’ fund equal to three months total household expenses – this is in case one of you loses their job. Make it a joint investment that can be liquidated quite quickly (one week) – at least 1/3 of it needs to be in a savings account, the rest can be in a moderately conservative LISP investment.
- You both need an emergency savings account
- You need to have a will in place immediately. If you have children from previous relationships, discuss the splitting of the estate right from the start. A trust may be in order. A Certified Financial Planner or Lawyer will be able to give you that advice.
- Be the OWNER on your partner’s life policy. By being the owner, the beneficiaries cannot be changed by your partner. This will protect you in the event of his/her death, irrespective of the state of the relationship. Should you get divorced, it will ensure that your children are still taken care of.
Actions: Speak to your financial advisor before entering a long term cohabitation arrangement.
Please share on Twitter or LinkedIn (buttons below)
Author Dawn Ridler