Love and finances: Questions you should ask your partner about money
In a recent article on www.abc.net.au they asked do you talk to your partner about money?
The article points out that:
- According to Relationships Australia, a support service for families and couples, financial stress is one of the top causes of break-ups.
- Financial planner Nicole Heales said partners should start talking about money early in the relationship. "If you're going to start living with someone and have a relationship with them, you want to be pretty upfront because you're really going to be inheriting their wealth or their debt," she said.
- Ms Heales said couples should also consider their relationship like a business partnership.
- "You need to have an exit strategy if something goes wrong,"
Sexually Transmitted Debt
The article is right that when you commence the relationship two become one, and in Australia the assets and debts of the parties quickly become one, which is why family law practitioners sometimes talk about sexually transmitted debt.
While the article does talk about having a plan, and treating going into a relationship as the same as starting a business, it doesn't tell you what an exit plan might look like.
Exit plan - two options
There are really two options for your exit plan, or the end of your relationship. One is that one of you dies, the other is that you separate or divorce. As people don't like to think about either of these things they often don't prepare for either of these things.
Exit A - one of you dies
Have you updated your Will? Do you even have a Will? Do you have a Power of Attorney or Appointment of Enduring Guardian. Did you know that some of these documents are automatically revoked (at least in part) when you marry or divorce, but some are not?
Have you given your superannuation company a binding death benefit nomination in the last three years?
Would your partner or family have access to enough money to pay for your funeral?
Would your partner or family have access to your contacts or Facebook or Email account to contact the necessary people to plan your funeral?
Read more about Estate Planning in our article "Why do I need a Will?"
Exit B - the relationship ends
The ABC article talks about having an exit plan, but actually having a plan in principle rarely works because people are rarely civil during a relationship break down. You need a binding plan, which means you need to speak to your lawyer. Nothing short of both parties getting independent legal advice and signing certain documents will result in a binding exit plan.
You might have seen some reporting that pre-numps are dead. That isn't really the full story. Read our article on that topic, "Are Pre-numps dead?".
What should I do?
Hamish Williams can advise you on both your Family Law rights or obligations, and whether a pre-nup or financial agreement is right for you, and your Estate Planning rights and obligations. Many people put off making these decisions as they are unsure who to choose, what to do, or who to include. It is a fairly simple thing to amend these documents once they are in place, the mistake that is more often made is people put off the decision making so long that they die with no documents, or wildly out of date documents. In the case of both family law break down and death this can cause unnecessary financial and emotional hardship. Meet with Hamish for your half hour free initial appointment and find out if there is anything he can do to help you avoid this.