Newly weds should plan well

ONE of the big-ticket items in young peoples' lives is the cost of a wedding. A great deal of planning is needed to ensure that the invitations, venue, catering, music, etc runs like clockwork.

ONE of the big-ticket items in young peoples' lives is the cost of a wedding. A great deal of planning is needed to ensure that the invitations, venue, catering, music, etc runs like clockwork.

However, what is often overlooked is drawing up the marriage contract and a joint financial plan.

The first major contract a couple decides on is their marriage contract. Should they get married in community of property (COP) or with an antenuptial contract (ANC), with or without accrual?

If they decide on COP, both parties will own all assets jointly, whether acquired before or during the marriage. Marriage in COP could lead to serious problems, however, should one party go insolvent because the joint estate would be sequestrated and all assets could be lost.

Should the couple decide on an ANC they will also have to decide whether they wish the accrual system to apply. With any ANC, the effect is that each party owns his or her assets and has complete control over their estate during the marriage. The assets of one spouse cannot be attached by the creditors of the other. But if the accrual system applies, then on termination of the marriage, by death or divorce, whatever the parties have built up during the marriage will, effectively, be shared.

The second extremely important legal document they must consider is a will. The significance of a valid up-to-date will can never be over- emphasised.

If you die without a will, no executor has been appointed and, as a result, the beneficiaries will have to nominate an executor on whom they all agree. So ensure that you have a current will.

As most young couples live on a joint income, it is vital that they consider buying a life insurance policy that will supplement the income of the remaining spouse on death or disability of a partner. This becomes increasingly important once a home is bought and if there are children to support.

Both long-term and short-term investments must be well thought out.

As a starting point unit trusts play an important role in a young couples' financial plans. Their liquidity makes them suitable as a medium-term investment and as a buffer for emergencies

When a first home is bought the couple should ensure they understand the terms of the offer to purchase and, perhaps, have their own attorney vet the agreement.

Newly-weds should also be wary of over-extending themselves financially when buying a home.

Another important aspect requiring consideration is retirement planning. Often this is not taken care of, as retirement seems incomprehensibly far away. It must be remembered that the sooner one starts with retirement funding, the less of a burden it becomes.

Lastly, young couples should avoid credit. Credit facilities are easily accessible and can often cause endless troubles wherein they find themselves using additional disposable income to pay off their debt instead of creating wealth.

l The writer is a director of Bryan Hirsch Colley

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