You have the dress. You have the venue reserved. You have the meal planned and the cake designed. Of course, you have the perfect man. You have given your wedding much thought, but have you planned to protect your financial future?
The wedding is only your first day of marriage. Ask any divorce attorney about the leading causes of divorce, and they will probably tell you that finances are a prominent reason couples split. So while you sort out the details for the big day, do not forget to talk to your spouse about how you will handle finances in the future.
Here are a few things you should consider:
1. Create a game plan
When it comes to finances, you and your future spouse might have different expectations. Because of this, it is crucial to create a “game plan” before tying the knot. While these conversations may not be ideal and might feel far from romantic, they are necessary. They can help you build a foundation for having financial conversations – and avoiding disputes – throughout your marriage.
Having these conversations prior to tying the knot is a good way to maintain your financial goals and remain successful in the business endeavors you take on together.
2. Know that ‘what is yours, is also mine’
If you are like most people, you will combine your assets to a certain degree, if not completely, when you get married. This includes a savings account, checking account or investments. Once married, you will likely take on the responsibility of helping pay your spouse’s debt as well.
So what does that mean? It is vital you know exactly what you are getting into when you get married. Once you start making those big and important financial purchases, you will be thankful that you understood your spouse’s financial reputation and habits ahead of time. Also, keep in mind that the debts you incur during the marriage will be a factor should you divorce.
There is a good chance that you will pay more taxes once married than you would when you were single, and this is true of higher income individuals in particular. The popular name for one of those tax increase, is the “marriage penalty.”
While paying more in taxes should not make you rethink a marriage, you should prepare for these financial changes and challenges that you will face together.
4. Prenup (and the lesser-known postnup)
When your money and property are on the line, a prenuptial (prenup) or postnuptial (postnup) agreement can prove crucial. While it is not the most romantic subject in the world, you should be reasonable. At minimum, you should learn more about these agreements and how they may benefit you.
Today, marital agreements are a norm in our society. You should consider them to be a preventive or proactive contract that helps you and your future spouse set expectations and protect your assets, whether or not you think divorce is a possibility in your future.
A typical prenup usually sets terms for how property should be divided or designated and how spousal support should be handled in the event of a divorce.
A postnup is the “nup” that you do not hear about as frequently. The postnup is helpful in the event that a spouse has a major change in financial situation during the marriage or you acquire substantial holdings or investments as a couple.
5. What if divorce does happen?
While you have likely heard it before… It is important to repeat; divorce does happen. The statistic that “50 percent of marriages end in divorce,” is accepted as general knowledge.
In the end, do not allow your emotions to trump your judgment. The wonderful news of your upcoming marriage is nothing but wonderful. But, do not let the excitement cloud the fact that there are important financial factors to consider prior to tying the knot.
Taking the time to discuss finances or draft a marital agreement prior to walking down the aisle could not only help you maintain harmony in your marriage but, if divorce should happen, it can make the process much smoother.