Things to do before you say “I Do”

Recently a dear friend of mine became engaged. She and her fiancée carefully selected the venue, cake, flowers, menu, guest list, and endless other wedding details. As we chatted about their well-thought out plans, she asked what my husband and I did regarding our finances. Great question! How easy and fun it can be to only think about the wedding day. But what preparations are being made for life after the wedding? While planning personal finances are not nearly as exciting as choosing a bridal gown or wedding bands, they are important to consider during the process of joining two lives into one household.

Things to Consider When Combining His and Hers
Checking, savings, and investment accounts
Decide how you will pay bills, how much you want to save and what kind of investments you want to participate in. One suggestion that has worked for many couples is having multiple accounts that are linked together at an institution. The ability to keep things in separate “buckets” but combined at one institution can make it easier to stay organized and meet financial goals.

Retirement Savings
Most couples want to change the beneficiaries of their 401k/IRA to their spouse. A simple form is required to make that change. Also take a look at how each portfolio is allocated for diversification and take time to review how much each of you should be saving.

Insurance
o Life insurance – do you have enough coverage and who are the beneficiaries?
o Home/Renters insurance – do you have all your valuables covered, including your new diamonds?
o Auto – get on the same policy to save some money.

Debt
If you or your spouse have debt, find ways to pay it off as soon as possible. If one partner has considerably more debt than the other, now is the time to talk about how the debt will be paid and what each person’s expectations are for sacrifices to be made in order to pay that debt. You don’t want a few years to go by and find out later that the spouse without the debt is resenting the one who brought “red” into the family finances.

Power of attorney, wills, directives, etc.
No one wants to talk about death but it’s worth the discussion to protect yourself and your new spouse. After the honeymoon, start talking with an estate planning attorney and they will guide you through the process.

Considering a Prenuptial Agreement?
There are pros and cons to these pre-marriage contracts. Here are some questions to consider before you go down this path…

What are you and your family trying to protect?
What type of asset protection already exists (trusts, partnerships)?
Where are gaps that leave some assets exposed?
What kind of access to family funds does your family want you to have vs. your future spouse?

When deciding how to protect the family wealth everyone wants to be assured that the document or vehicle in place is going to work should problems arise down the road. While this topic deserves its own post, I will leave you with this thought. A prenup can be ripped up and therefore be meaningless. An irrevocable trust cannot. There are sophisticated planning tools that protect family assets that do not require relying exclusively on a prenup.

If you are G2 (3, 4, or 5) your parents are most likely behind the push for a prenup. Understandably so, as it is primarily your inheritance they want to protect. Get your own legal representation and collaborate with G1s legal council as issues of ownership and asset protection are sorted out. Hopefully the negative sentiments associate with prenups will be avoided with careful communication on the part of all family members.

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