So, let’s discuss the subject of money and relationships. It can sometimes feel like a taboo topic at the best of times, and it hardly makes for romantic small talk to bring it up early in a budding relationship.
However, let’s consider why it’s so important for men and women not to ignore the practical side of entering into a relationship – even when it may be the last thing on your mind as you’re swept up in the excitement and romance of dating somebody who seems really rather special.
What you need to think about when you meet somebody new
You’ve taken the all the risks, you’ve kept going when it was so tempting to quit – but you didn’t – and you have reaped the rewards of a successful career and acquired considerable wealth along the way. Now you’re thinking how nice it would be to meet somebody, settle down and enjoy the fruits of your labours. It’s understandable if you’ve got some concerns about what a long-term relationship means for combining assets and the practical implications of managing your money.
So, what are the key things to consider? You can think of it as three phases – dating, living together (or to use the official term, co-habiting) and marriage.
The dating is really about getting to know somebody better – do they want the same things as you and is life just better with them rather than without them? There’s no real financial or legal impact at the dating phase, except if one of you has more than the other. Are you happy to pay for the expensive holiday in the Seychelles you’ve always wanted to share with somebody special? Does it bother you if the person you’re dating earns significantly more or less than you do?
If the dating is going well and you’re thinking about moving in together, you will need to decide where it’s going to be – will you rent or buy a new home, or will one if you move in a house the other already lives in? Are you prepared to make changes to the home so that it’s ‘ours’ rather than ‘mine’?
This is where legal and financial aspects come into consideration. Let’s assume you’re the wealthier partner and that it’s your home you’ll be living in.
There was some talk of partners who lived together gaining rights after two years. At present, this is not the law…but that could change.
Currently, if one person owns the property, a partner could only claim rights if they had made a capital contribution, such as paying part of the mortgage, paying for improvements to the property (a new bathroom, for example), or if there is a child in the relationship.
Because you have fewer automatic legal rights than married couples, a co-habitation agreement is a way of laying out the terms of living together. This legal document sets out the arrangements for finances, property, children and what happens if one of you becomes ill, dies or you split up.
Now it’s going really well and you’re thinking of getting married. You don’t get married with a plan to get divorced, but it is best to think about what you’re comfortable with should the worse happen.
Prenuptial (prenup) agreements are legally required in some countries but are not quite yet a legally binding document in the UK. However, courts will give serious consideration to the prenup if you get divorced. A prenup should be fair and it should be done in a reasonable timeframe. It can’t be signed the night before the wedding! This agreement must be signed off a month before the wedding as a minimum and both parties should have independent legal advice (but it is OK for you to pay for your partner’s advice). A prenup also requires full financial disclosure by both parties. This can also be reinforced with a postnup. A ‘life event’ such as having children can partly void a prenup, so it’s best to address those points in the original agreement and agree for there to be a review of the agreement if children arrive.
There is the subject of how you raise the matter. You may not wish to be on bended knee with a ring in one hand and a document in the other! So, once the Champagne and celebrations have been enjoyed, ensure you raise these issues with each other before you embark on the big relationship milestone of getting married. It’s also important to ensure you seek the appropriate expert advice when it comes to the legal side of things and be open with each other about your wishes.
While it might not seem like the most romantic of topics, understanding and securing your financial future will help both of you feel secure and well-prepared should the worse happen. And once the paperwork is sorted, you can just enjoy all the great things that come with a successful and loving long-term relationship!
Rudy Vandaele-Kennedy is an Investment Manager looking after private clients and their families, as well as their business and charitable interests.
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