If you and your partner are ambitious and successful\u2014perhaps you run your own business or occupy a seat in the C-suite\u2014you\u2019re already aligned on career, but can you say the same for your finances? A marriage between two power players brings the potential for future bliss, but also the need to protect your assets while merging life goals.<\/p>\n
\u201cWhether this is a first marriage for both partners or a second marriage for one or both of them, if you\u2019re an adult with accumulated assets, you need to approach the financial side of your marriage like a business decision,\u201d said Sally Kirkpatrick, a senior vice president and financial advisor with RBC Wealth Management in Chevy Chase, Maryland.<\/p>\n
\u201cIn the thick of the romantic decision to get married, no one wants to have these conversations about their money, healthcare and estate planning, but they are a necessary evil,\u201d she said.<\/p>\n
While planning your wedding, you and your partner should connect on serious topics and consult with professional advisors such as a marriage and an estate-planning attorney, Kirkpatrick said. Considerations include where to live (since many couples have their own homes), how to treat dependents and who gets what if the marriage ends.<\/p>\n
Although the potential for divorce isn\u2019t an easy subject to broach with your partner, it\u2019s an important conversation. A prenuptial agreement has also become a standard document among people aiming to protect their wealth. A 2013 survey from the American Academy of Matrimonial Lawyers found that 63 percent of attorneys saw an increase in prenups over the previous three years.<\/p>\n
Protection of separate property was the most common item covered by 80 percent of respondents, followed by alimony and spousal maintenance (77 percent) and division of property (72 percent). Nearly half of the respondents also noted an increase in women initiating prenups, the report showed.<\/p>\n
\u201cSome people see a prenuptial agreement as an impediment to getting married,\u201d said Kirkpatrick. \u201cA prenup is almost like saying, \u2018In case this marriage doesn\u2019t work\u2026\u2019 No one wants to hear that, but it\u2019s essential that they see it as protection for both partners.\u201d<\/p>\n
Stuart Bear, an attorney with Chestnut Cambronne in Minneapolis, suggests negotiating a prenuptial agreement six to eight weeks before the wedding to avoid potential future claims of being under pressure when signing the agreement.<\/p>\n
Topics to address in a prenuptial agreement include what assets each partner owned before the marriage, such as real estate and investment accounts, and what should happen to them going forward. Children from previous relationships are also part of the equation.<\/p>\n
\u201cIf either or both partners have children from a previous marriage, they need to address how they will be taken care of financially in addition to taking care of each other,\u201d said Kirkpatrick. \u201cA prenup goes hand in hand with a trust for the kids. A trust can always be altered in the future, but it\u2019s important to get on paper how you want your money to be handled if you become incapacitated.\u201d<\/p>\n
If you\u2019re providing support to a sibling or an aging parent or want to leave them with an inheritance, make sure to address it in your prenuptial agreement and estate plan, said Bear.<\/p>\n
\u201cYou also need to provide a full and accurate disclosure of all your assets in a prenup,\u201d Bear added. \u201cYou can\u2019t hide any assets in a trust because that could be grounds for tossing out the entire agreement.\u201d<\/p>\n
Even though most states don\u2019t require it, Bear recommends each person in the relationship have his or her own legal representation. \u201cKeep in mind that a prenup can be amended in the future,\u201d he said. \u201cIf circumstances change and you want to override it at some point, you can.\u201d<\/p>\n
While a prenuptial agreement addresses the \u201cwhat if\u201d questions of the future, your day-to-day life as a married couple requires some answers about the assets you each have now, as well as those you\u2019ll accumulate during your marriage.<\/p>\n
Kirkpatrick suggests couples maintain a joint checking account for regular expenses and that they share costs. Each spouse should deposit money in that account based on his or her individual income, allowing the couple to split expenses on a proportional basis.<\/p>\n
\u201cI\u2019m a big fan of maintaining separate stock and investment accounts,\u201d said Kirkpatrick. \u201cYou can still use the money to benefit both of you for things like taking vacations or buying property, even if you have separate funds. But once you scramble eggs, they\u2019re hard to unscramble\u2014and so are investment funds.\u201d<\/p>\n
Kirkpatrick said men and women tend to have different investing styles, with women particularly concerned about maintaining their lifestyle in retirement. She says women are more cautious because they know they generally live longer and will need to take care of themselves. Men tend to be more optimistic about their ability to continue making money.<\/p>\n
\u201cEven if you have separate accounts and separate investing styles, it\u2019s best to have annual financial reviews done by a shared financial advisor,\u201d said Kirkpatrick. \u201cHaving someone look at all your accounts together is important.\u201d<\/p>\n
Bear recommends that each spouse sign a financial durable power of attorney document to allow access to retirement accounts or other accounts that are held only in one spouse\u2019s name.<\/p>\n
\u201cIf the account holder is incapacitated, a power of attorney can allow someone to handle the account,\u201d said Bear. \u201cEven in power couples, sometimes one spouse\u2019s assets are illiquid, so it can be helpful to have access to that money.\u201d<\/p>\n
Couples should also talk about the financial and emotional decisions related to any future healthcare problems, particularly if they are getting married later in life. Kirkpatrick said couples in their 60s or older may have already discussed healthcare directives with their children or other relatives and will need to re-evaluate their choices in the context of their new marriage.<\/p>\n
\u201cThey need to establish how decisions will be made about their care, particularly if they have adult kids who want to be involved in these decisions,\u201d said Kirkpatrick. \u201cYou can even address things like whether you have long-term care insurance or plan to self-fund care issues in the prenuptial agreement. You need to make it clear where the money would come from to pay for long-term care, whether it\u2019s each individual\u2019s assets or joint accounts.\u201d<\/p>\n
Bear says a written healthcare directive is essential to establish who makes decisions in the event you become incapacitated. He also recommends signing a HIPAA (Health Insurance Portability and Accountability Act) release so that your health information can be shared.<\/p>\n
One final topic for engaged couples to address is their beneficiaries. It\u2019s wise to review those designees in the context of your new relationship. Some couples will want to name children or other relatives as the beneficiary of some of their accounts, while other couples will want to name each other as beneficiaries.<\/p>\n
Each spouse in a couple comes into the marriage with a financial philosophy in place, said Kirkpatrick. \u201cSome people want to take care of their kids, grandkids or other family members so they can give them advantages in life. Others would rather spend their money and leave their children with less so they have to work hard, too.\u201d<\/p>\n
Couples, even if they don\u2019t merge all their money, need to mesh their financial plans to avoid future conflict with each other or among their heirs.<\/p>\n","protected":false},"excerpt":{"rendered":"
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