Contrary to what some might think, people don’t always find love and the right partnership while they’re young. In fact, for many people, these come later in life when they’re more financially and emotionally stable.
However, aside from making changes to your retirement plan, there are certain complexities that come with combining your finances with that of your partner.
In this post, your trusted financial planner on the Central Coast shares some of the things you need to know about this complex topic:
Does “What is mine is yours” Apply?
Generally, yes. Married couples are allowed to pool their assets to manage them together.
There are some exceptions, though. If one spouse owned an asset before the marriage, it will not be counted in the pool of assets.
If you own individual properties before marriage, these will usually remain your property after marriage. The exception is if the home is a newly built home between the range of one to five years old. In this case, the spouse who has not been contributing to the purchase of the house can make a claim on the property.
Communication Is Key
When you combine your assets with that of your spouse, there are bound to be some issues that could arise.
The best way to avoid these is by being transparent and open with each other. It may also be a good idea to share control of the finances and make the big money-related decisions together while one of you keeps in charge of the day-to-day expenditures. It all boils down to how you want things to work. Remember to discuss not just about your finances for the present – you also need to make a retirement plan that works for both of you.
You Need to Be Efficient in Your Approach
Married couples are permitted to combine their finances as they see fit, subject to certain conditions. This could mean that you and your spouse have separate accounts and credit cards, or you may have a joint account. As long as you’re both happy, there’s no wrong approach.
It’s also a good idea to confirm that you’re each contributing to what’s needed, including bills and expenses. It’s not uncommon for couples to not ask for reimbursement, especially if they’re on good terms with each other.
If you already have financial goals and a retirement plan, for example, you may have to reassess them and see how they are changed as you are now a part of a couple. Your financial adviser can help you navigate through the changes you have to make.
Managing Your Estate Matters
If you’re going to marry someone, it’s a good idea to make sure you’ve also updated your Will and other Estate Planning documents. As your estate passes on, it’s important that the wishes of you and your spouse are respected.
It’s also a good idea to give the beneficiary the right to object to the terms of the Will. This way, there will be some conditions and policies that your spouse must stick to.
Should You Merge Finances If You’re Not Married?
If you’re in a common-law or de-facto relationship, it’s up to you and your partner to agree on how you’re going to manage your financial affairs. This can be done through a legal representative, or you may be able to agree with your partner to manage the assets by yourself.
Combine or Keep Separate?
These are just some of the things that you need to understand about combining your finances with your spouse or partner. Apart from tweaking your retirement plan, you need to decide whether or not to merge finances with your common-law partner, manage your estate, and more.
Property division and other terms of your relationship/marriage can be agreed on during your relationship, but it’s advisable to have a legal document and Will drawn up. This will make sure that the division is carried out and that the assets are controlled according to the conditions of the document should separation/divorce or death of a partner occur.
You need to communicate and be efficient with the way you handle your finances, too. Of course, you can consult your trusted financial adviser on the Central Coast to make sure you’re doing everything the right way.
DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.