Three essential elements to include in your financial plan when you get married
You’ve booked the venue, the dress and the photographer. Your wedding day is set to go off without a hitch. But have you taken the time to discuss important decisions you should include in your financial planning with your partner?
Before you say the words, “for richer or poorer, in sickness and health, till death do us part,” have you considered –
1. For richer or poorer – what is your marital agreement?
In other words, will you be married in or out of community of property?
When you are married in community of property, all the assets you accumulate before and after the marriage belong to both partners equally. It becomes a part of the joint estate of the marital contract.
A marriage out of community of property ensures that all the assets you have before the wedding belongs to you and are not included in the marital estate. After marriage you have the choice to combine your assets or to continue building separate estates.
If your pre-nuptial agreement is without accrual it means everything you own before the marriage is yours and all property and assets, you accumulate during the marriage remains yours.
A prenuptial agreement with accrual means everything you own before the marriage is and remains yours. However, whatever you and your spouse gather as assets and property after your wedding is shared equally between husband and wife.
Deciding on your marital agreement is a personal choice and there are several legal implications to consider. We recommend that you discuss the options best suited to your needs with a legal expert. Additionally, it is important to note, that even if you don’t get married but live with your partner for a number of years, the state does not recognise “common-law” or “cohabitation” as a legal relationship under South African law. It is, therefore, vital that you have the necessary contracts and agreements in place with your partner.
2. In sickness and in health – can you survive an illness financially?
Think about this. One in twenty-nine women are diagnosed with cancer every year. Today more men are dying from lifestyle related illnesses like heart disease, strokes and high blood pressure than ever before.
We recommend that you speak to your financial advisor about critical illness cover to enable you to survive financially if you or your spouse is diagnosed with an illness like a heart attack, cancer, stroke, Alzheimer’s and Parkinson’s.
Another consideration for your financial plan that can help secure your financial future, is to plan for the possibility of having children. If you plan for the loss of income when you go on maternity leave and perhaps even to take time out of work when your children are born, you will be better prepared to survive financially. By law, your employer does not need to pay you while you are on maternity leave but you have the right to claim UIF during the period.
3. Till death do us part – have you considered the worst?
Nobody enjoys thinking about death. However, apart from the emotional impact the death of a spouse will have, there are severe financial implications too.
In the immediate aftermath of death, you will need access to money for day-to-day expenses, to pay for the funeral and to survive in the short term. To ensure you have access to funds, it is advisable to have separate bank accounts. If you have a joint account and your partner passes away, the account will be frozen until the estate is wound up. Also, keep records of where your funeral policies are held and whether there are any life insurance policies of which you are the beneficiary, as that will help you to access cash in a short time.
It is useful to discuss life cover and nomination of beneficiaries with your financial advisor to ensure that you anticipate you and your spouse’s needs in the event of either one’s death.
At the same time, give your loved ones a final gift of having a valid last will and testament in place. Not only will it help to speed up the finalisation of your estate after death, it will also minimise the potential for family conflict over your assets. Remember that your will is not just about specifying your wishes about your assets, but also what must happen to your children after your death and who will care for them if you should both pass away.
Remember, marriage is a long-term relationship built on love and trust. Planning and managing your financial future will help to maintain the legacy of love and trust, so make it a priority.