Marriage is one of the biggest steps a person will take in life. When two people decide to make a life together, finances are a significant factor. Before marrying, we advise you to understand financial planning and prenuptial agreements. Beyond immediate concerns like wedding expenses, long-term wealth planning is vital to establishing a solid foundation for a marriage. Here are four tips for securing your financial future before getting married.
Communicate your financial planning and prenuptial agreements goal
Couples should communicate about how they will approach financial planning after marriage. This means discussing financial goals, such as buying a house or saving for retirement. A married couple should be on the same page when making financial plans.
To achieve your financial goals both parties should be transparent about their financial situation and credit history. What assets and debts are they bringing into the marriage? What are your spending habits? Discussing these issues honestly will help start the marriage with an understanding of where you’re both coming from.
Family planning for financial goals
Family planning should be carefully considered before getting married. Parents have many financial decisions. Obviously, the number of children you want is a key factor. Other relevant issues include whether you’ll opt for private education or public education, sports and other extra-curricular activities to involve your kids in, handling any medical expenses, and more.
Another part of family planning is organising your estate. You can protect your assets by drafting a will. Marriage automatically invalidates all existing wills made before the union. The only exception to this is wills that have an “in contemplation of marriage” clause. Both parties should consider how they would like to set up their will for their family’s financial wellbeing.
Prenuptial agreement or not
A binding financial agreement (BFA) entered into before marriage is called a prenuptial agreement. They are a popular way of arranging for the division of marital property in the event of a divorce. While they may not be for everyone, they do offer financial benefits. A party who has significantly more assets than their spouse may wish to draft a prenuptial agreement to protect their property.
A BFA doesn’t need to cover the entire marital pool. It can cover specific assets that may be particularly important. This could include rare artwork, classic collectible vehicles, and the like. Some rare assets can be difficult to assess without a specialised valuation expert. A formal agreement ensures that these assets are handled in a way that’s agreeable to both parties.
Set financial boundaries for financial benefits
If you’re sharing a joint bank account, it’s often worth determining each person’s responsibilities when it comes to handling money. Is one person going to be in charge of staying on top of bills and purchasing necessities such as groceries? Also, consider making a financial plan to set down how you’ll make decisions around money. For example, you may want to make it a rule that if one person wants to purchase something worth over a certain amount, you discuss it first.
It’s also a good idea to save money in an emergency fund in case you need the financial support to cover a future debt. Speak with financial planners for further education on what your needs are regarding a suitable “rainy day” fund.
Conclusion on your financial situation
Getting married is a major commitment for many reasons. Joining your lives together comes with many considerations, not the least of which is how you’ll handle your joint finances. Money problems are one of the most common reasons for marriage breakdowns. However, you can ensure that your union has a stable financial foundation. This article has essential tips on how to approach your finances for a healthy relationship.
For assistance with property matters, our experienced team can help. Contact us today to set up a prenuptial agreement or any other family law matter.
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