Love & Money: What You Need To Know To Protect Your Wealth Before, During and After Marriage
About the Author: Monica Mazzei focuses her practice exclusively on family law and specializes in dissolution actions involving complicated valuation and financial matters and complex community property and support issues. Ms. Mazzei represents clients in the Bay Area with a concentration in San Francisco and Silicon Valley. Ms. Mazzei frequently lectures on the topic of “Love & Money” in conjunction with Certified Financial Planner, Michelle Soto from Bailard, Inc. Their next presentation is to “Girls In Tech” August 24, 2011 in San Francisco.
There’s plenty of talk separately about relationships and personal finance, but very little practical knowledge on integrating the two. The headlines are grim…. Over 40% of marriages end in divorce…. Money is the most common cause of arguments…. Following divorce, the woman’s standard of living plummets by 27%. Clearly, there’s a need for more education!
The first step to avoid becoming one of these statistics is to discuss finances with your partner before making the trip down the aisle. This may sound simple, but very few couples actually do this. It’s important to know the other person’s attitudes about money, what debt they may have and how it should be paid off during marriage, and what assets both people are bringing into the marriage. You also want to consider whether a pre-marital agreement is right for you. Many think that pre-marital agreements are only for the rich and famous, but that is not the case. A pre-marital agreement allows couples to decide how to treat assets and income upon a divorce or the death of either party regardless of the value of the assets or the amount of income the couple earns.
During marriage it’s important that you think of your family as a business and you and your spouse as Co-CFO’s. Even if one person is better at handling the family finances, both people should be kept in the know about the finances and participate in major financial decisions. This can be easily accomplished by creating a family balance sheet, periodically updating it and taking the time to discuss it together. Couples who are effective communicators about money schedule weekly or monthly family meetings to discuss the status of the family finances.
No one likes to think about divorce, but with divorce rates at an all-time high it’s a topic that deserves attention. Many women don’t realize that if they are the breadwinner in their family they may have to pay spousal support or alimony to their husband. The clients that are most satisfied with the outcome of their divorce are the clients that are most educated about the process.
Thoughtful planning and educated decisions about money made before marriage provide a clear roadmap of a couple’s financial future. Although not very romantic, having open and frequent dialogues about money can alleviate the financial strain which is so often the cause of divorce.