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Michal Lancemore

Lovers, Protect Your Assets!

Written by Michal Lancemore

I have seen this time and time again in my years working as a financial planner.  Boy or girl meets girl or boy.  One party is accomplished and financially independent with several assets to their name. Other party has nothing. A relationship ensues.  Both are stricken with love’s first flurries.  One moves in with the other.  All is going well.  Fast forward a couple of years and love dies a thousand deaths.

With the death of love comes clarity.  All assets are now (regrettably) up for grabs.

I cannot stress enough how critical it is to protect your assets and financial position when entering a new relationship. It’s definitely not sexy, but neither are protracted court proceedings where your assets are diminished by either your ex spouse or your lawyers.  Here are some steps you can take:

Open Communication: Start by having open and honest conversations with your new partner about finances. Discuss your individual financial situations, including assets, debts, income, and financial goals. Transparency is key to building trust and understanding.

Maintain Separate Finances: While it’s common for couples to have joint accounts for shared expenses, consider maintaining separate accounts for individual assets and income. This can help protect your pre-existing assets and maintain financial independence.

Update Legal Documents: Review and update your legal documents, including wills, trusts, and beneficiary designations on superannuation accounts and life insurance policies. Ensure that your assets are distributed according to your wishes, especially in the event of incapacity or death.

Furthermore, to really mean business, financial agreements can be an important tool for protecting your assets and financial position in a new relationship. Here are some examples:

Prenuptial Agreement (Prenup): A prenuptial agreement is a legal document signed by both parties before marriage that outlines the division of assets, spousal support, and other financial matters in the event of divorce or separation. It can specify which assets remain separate property and which become marital property during the course of the marriage. Including a prenup can provide clarity and protection for both partners, especially if one or both individuals have significant assets or debts.

Postnuptial Agreement: Similar to a prenup, a postnuptial agreement is a legal document that outlines financial arrangements between spouses, but it is signed after marriage. It can be useful for couples who did not create a prenup before marriage but want to establish financial agreements during the marriage.

Co-habitation Agreement (my favourite): If you’re entering a long-term relationship or living together but not getting married, a co-habitation agreement can serve a similar purpose to a prenup or postnuptial agreement. It defines financial arrangements and property rights for unmarried couples living together, helping to clarify responsibilities and protect assets in case the relationship ends.

Financial Power of Attorney: A financial power of attorney grants someone you trust the authority to manage your financial affairs if you become incapacitated. By designating a trusted individual, you can ensure that your assets are managed according to your wishes, even if you are unable to make financial decisions yourself.

Domestic Partnership Agreement: For couples in domestic partnerships or civil unions, a domestic partnership agreement can establish financial agreements similar to those in a prenup. It can address property division, financial support, and other important financial matters to protect the interests of both partners.

Separate Property Agreements: In some jurisdictions, couples can enter into separate property agreements to clarify which assets are considered separate property and which are marital property. This can be particularly useful for individuals who want to protect assets acquired before the relationship or inherited assets.

When considering any financial agreement, it’s essential to consult with a qualified lawyer who specialises in family law and understands the legal requirements in your jurisdiction. They can provide guidance on drafting the agreement to ensure that it is legally enforceable and meets your specific needs and objectives. Additionally, both parties should fully disclose their financial information and enter into the agreement voluntarily and without coercion.  Good luck out there, lovers.

 

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