Blending Families

You may have been dating someone for over a year and things are going really well so you’ve decided that you want to move in together.  All you need to do is sell your house, move into his/her’s and book the moving truck.  It sounds easy, but it’s not quite that simple if you want to protect your finances. 

Before you get swept along in the thrill of the moment you need to take a practical look at how this major step could impact on your financial situation.  This is not just budgeting.  You need to consider the protection of not only your own assets, but also those of your partner’s and how any joint assets will be owned.  This is especially important when there are children from previous relationships.

Once you are married, or have been in a de facto relationship for more than three years, all property of the partnership becomes “relationship property” unless you contract out.  Contracting out typically involves putting in place a prenuptial agreement.  There are some simple steps you can take before cohabitating, which could make things a lot more straight-forward if the relationship doesn’t work out, or one of you were to die. 

Raising the idea of a prenuptial agreement can be seen as being a rather delicate subject, and a true test for the relationship.  Firstly, remember that this is not just important for you, it is important for him/her and any family you have.  This is not about whether you think the relationship will work or not.  It is about obtaining agreement with your proposed partner about your current financial situations and how future assets and how income should be handled. 

The chances are your partner will have also been thinking along the same lines.  It is not a matter of not trusting your partner.  It is a reality that a large number of relationships break down and there are financial consequences as a result.

Here are some things to consider:

• Do you want to keep your existing assets separate?
• Do you currently have a family trust and what stage are you at with your gifting programme?
• If you don’t have a trust is this something you should be considering?
• Do you have any company shareholdings or are you self-employed?
• How could your new relationship impact on your business partners without an agreement? 
• Perhaps you are buying a property jointly.  Do you want to purchase this as joint owners or have you considered being tenants-in-common, owning equal or unequal shares?
• If you have children, would you want them to benefit from your assets if anything happened to you?
• When was the last time you reviewed your life and personal insurances? This should be done whenever you have a major life change. 
• Is your will current? You should complete a new one whenever you have a major life change. 
• Do you have enduring Powers of Attorney for care and welfare and/or property?

You should consult your lawyer to ensure you have looked at your situation thoroughly.  You will both need to seek independent legal advice if an opting-out agreement is required.   Once you have explored these items and sought professional advice you can be assured that you have started out with your new life on the right foot.