Merging Finances
Financial experts agree that it’s best to begin financial conversations before marriage to help determine “yours and mine and ours.” When it comes to banking, Joan Rossi, a certified financial planner, says it’s most common for couples to create one joint account, while some couples work with three accounts—one joint and one for each person.
It’s important to have in-depth discussions to understand how you and your fiancé will share accounts and pay bills. Other topics for discussion include how much debt each person has, creating a budget, tax issues, retirement planning, what to do about existing investments and an inventory of insurance coverage.
Rossi recommends setting a monthly “date” where you can talk about your finances so you can prevent future conflicts. “Engaged couples need to have more conversations on their financial lives, including their personal views on money and finances,” she says.
Becky Krieger, a certified financial planner with Accredited Investors Inc. in Edina, says communication and planning are key to making a couple’s financial relationship run smoothly. “Be open to discussing expenses, compensation and budgeting at the same time you’re planning your wedding location, guest list and wedding colors,” Krieger said. “Get an understanding of where each partner is coming from and be open to their needs.”
If one partner has a good relationship with his or her banker, Krieger explains, it may be beneficial for the couple to stick with that institution. This way they can build a rapport in case they ever need to build on that relationship for a major transaction, like buying a house.
Ruth Hayden, author of For Richer, Not Poorer: The Money Book for Couples, owns Ruth L. Hayden & Associates Inc., a St. Paul-based financial consulting and educational firm, and teaches a five-session class called Couples and Money. She says that when it comes to merging finances, couples need to recognize that they’re different from one another and need to learn how to understand each other and work together. “This is about ‘Where’s the middle ground? How is this system going to look like both of us?’”
Prenuptial Agreements
Couples shouldn’t be afraid to explore a prenuptial agreement, or a contract between two people that governs the rights and liabilities of each person if they happen to divorce or if one spouse dies. “Couples should consider a prenuptial agreement if either or both have substantial existing assets, widely differing incomes, business interests—particularly family-business interests—children from previous relationships or a desire to maintain earnings separate from the marital estate,” said Joan Lucas, an attorney and owner of Lucas Family Law in St. Paul.
Since prenups are governed by Minnesota law, attorneys must assist with their preparation and execution, and the contract must be executed at least one day before the marriage with a witness present.