Couples therapy for your finances

Most of us love a bit of romance, but there are times when we need to remove our rose-tinted glasses and take a realistic view of something. This is especially true when thinking and talking about money.

Here are four important questions related to joint finances for couples to consider, especially if you are in a long-term relationship:

1. At what level is your relationship?

Have you been dating and are you planning on moving in together? Are you in a committed relationship without necessarily wanting to get married? 

Living with someone can be more cost effective than living alone because you can split expenses like rent, utilities (water and electricity), groceries, and other costs. If you decide to move in together, you will most likely start sharing these expenses. Unless one partner is very affluent, and the other is entirely dependent, but in most cases both partners would contribute. Some couples even buy residential property together.

Whatever your choice of arrangement, it’s a good idea to agree on the financial responsibilities and commitments each of you is willing and able to take on. This helps to manage expectations and avoid headaches, misunderstandings and conflict in your relationship especially when you are taking it to the next level by moving in together.

2. Are you both being open and honest?

Trust is an important part of a romantic relationship, and it will also play a big role in running your joint finances. If both partners are not transparent about their income and expenses, and what they are able to take on financially, it could cause problems.

Apart from being open and honest with each other, it’s also important to be honest with yourself. Many relationships don’t work out. To proceed as if everything will always be rosy is probably not realistic. That’s why your joint financial planning should also include the possibility of a split in future. This is not a nice thought, but it is important to consider so try not to shy away from it.

There are couples who buy property together while choosing to avoid these uncomfortable conversations. Should they split or one partner pass away, the other could be left with financial challenges that are complex and expensive to sort out. For example, the purchase of a property and the granting of a home loan over that property might have been based on joint income and affordability. Then, if the second partner is no longer in the picture for whatever reason, the remaining person could be held liable because they signed their name to the agreement/s. 

3. Do you have your legal docs in a row?

If you have taken on joint financial commitments and liabilities, it’s important to discuss things like life insurance and wills. You may even want to consider asking a lawyer to draft a co-habitation agreement. Ken Newport, National Manager of Succession Planning at Capital Legacy, explains a few of the important aspects for couples to consider:

A co-habitation agreement or domestic partnership agreement sets out joint responsibilities and how liabilities should be taken care of. It stipulates things up front, helping you to avoid potential quibbles and conflict later. This is even more worthwhile if you have a child or children together.

• Making your partner the beneficiary of your life cover, in the event of you passing away, empowers them to take care of your joint commitments, as opposed to having to fend for themselves financially.

• Drafting a will is a good way to make sure your life partner inherits your assets if you pass away, especially if you are not married. The two of you could draft ‘mirror’ wills, which means identical wills, but naming each other as beneficiaries. This could greatly simplify and speed up your estate administration process after you pass away and protect your partner financially.

Bear in mind that recent court rulings and proposed changes to relevant pieces of legislation, mean there are now situations where you’ll be treated as if you’re married even if you’re just living together. 

Ken explains, “The Intestate Succession Act (‘intestate’ means passing away without a will) and the Maintenance of Surviving Spouses Act were both changed recently. Key changes include the definitions of ‘spouse’, ‘marriage’ and ‘support’ being expanded to include ‘a partner in a permanent life partnership where the partners have undertaken reciprocal duties of support’.”

4. What about kids?

Drafting a will is even more crucial if you have a child or children together. Or if you bring children from previous relationships into your new arrangement.

A will is the place to nominate preferred guardians for minor children and create testamentary trusts for them. You can even specify the age they should reach before they can manage their finances independently. Wills are powerful tools to use in making sure your joint finances are in order and your loved ones are cared for if you are no longer around. 

Joint finances are about creating and enjoying a certain lifestyle, together. It is the ultimate act of love to ensure that your partner and children, if any, can continue having and enjoying that lifestyle even when you are not around.

Capital Legacy are experts at helping couples (and singles!) with estate planning and drawing up their wills. The drafting of your will, as well as unlimited amendments, courier pick-up, keeping in safe custody, and retrieval of wills are all FREE with Capital Legacy. For a nominal fee per month, you can also indemnify your estate against the unexpected costs of dying. Even if you do not opt for this add-on, simply protecting your legacy and making sure your wishes are clearly set out if you pass away, is a positive way of protecting your partner.