How to start your finances off on the right foot when you tie the knot

You must establish if either of you have dependants and get a sense of each others “financial baggage”. Picture: 123RF/HONGQI ZHANG
You must establish if either of you have dependants and get a sense of each others “financial baggage”. Picture: 123RF/HONGQI ZHANG

You meet the person of your dreams, you’re starry eyed, you’re in love and you don’t want to talk about finance. What’s yours is mine and mine is yours.

However, it’s crucial to sit down with your partner and to engage in an unemotional conversation to understand your personal financial demands, Clare Cousins, financial planner at Veritas Wealth, says.

For example, you must establish if either of you have dependants and to get a sense of each others “financial baggage”.

She says once you have a lifestyle and plan that you’ve figured out for yourself you may want to know a little about you other half’s values around money. 

The cheapest and easiest marriage in South Africa is in community of property, which basically means your cumulative wealth is shared, i.e. “split down the middle”, she sold a panel discussion for a group of 20- to 35-year-olds on getting their financial affairs on the right track. .

“It worked out really well for Jeff Bezos’s wife who just got $38 billions worth of Amazon stock transferred into her name,” says Cousins. “The problem is, it’s half down the middle and if the bank decides to call up that debt, they’re coming after you too.”

If you’re starting a family there’s usually one person in the relationship who is going to take a backseat on their career.
Clare Cousins, financial planner at Veritas Wealth

According to Cousins community of property is not a good idea as the risk “is just crazy”. However, opting for the opposite of that, which means you and your spouse keep your wealth separate is also not wise.

“In practise, if you’re starting a family there’s usually one person in the relationship who is going to take a backseat on their career and their earnings aren’t going to be quite what they used to be,” she says.

Cousins suggests taking “the fairest option” of an antenuptial contract with accrual.

The accrual system, established in SA in 1984, allows you and your partner to specify the amount of money you’ve brought into the marriage.

“These are the starting values and everything after that is split fairly evenly down the middle. The useful part of this is that, because the accrual system only applies in the case of death or divorce, no one can come and take your half of the share,” she says.

Another advantage is that if your partner is made insolvent, as long as you’re married at the time, they can’t get you too, financial planner Ian Beere adds.

If you decide not to get married and instead opt for a cohabitation, Cousins warns that it is crucial to get a legal document drawn up around finances, property, children, etc.

"If your partner dies, making a claim against his or her estate for spousal maintenance could be difficult and if there is no will either, you could also struggle to claim assets like a home," she says.

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