Posted on: Sunday, April 10th, 2016
At our marriage preparation workshops we get asked all the time. How do we avoid fighting about money? The answer is – you can’t, but there are lots of money fights you can avoid by planning ahead. This week we will examine the value of a prenup and what to do with personal debt.
Prenups are becoming vogue and reflect a shift in the timing of marriage. Since couples are marrying later in life individuals have usually accumulated assets, own businesses or are in line to receive inheritances. A prenuptial agreement executed before saying ‘I do’ can be a practical and smart sign of trust. For e.g. you’ll decide ahead of time:
- What property will be considered personal or married property
- How any marital assets should be divided
- Particulars about estate planning and alimony
It’s better to have these conversations when you are very much in love and not when you are highly emotional and potentially vindictive during a breakup. Cohabitation Agreements, Postnups & Trusts are alternative options.
While it can be very prudent to wait till all major individual debt is paid off before saying ‘I do’, some may decide to go ahead debt notwithstanding. Some key points and discussions to have early:
- Look at all major debt – student loans, home, auto, credit cards, LOC
- Have either filed for bankruptcy?
- Should you share your debt? – up to you
- If you do take on your partner’s debt extend it as a gift not a loan – Kevin O’Leary in Cold Hard truth on Men, Women & Money
- In some ways marriage is a business partnership – do your due diligence
Consider taking our one day marriage prep workshops for engaged couples!
Next week we’ll examine the question of joint or separate accounts.