Don’t get hitched to disaster

Same-sex couples in long-term relationships have probably had plenty of time to develop trust in their partner while they waited for the marriage equality green light. In fact, regardless of a gender preference, everyone should pause and ponder how they will fare as a duo before rushing in to tie the knot … especially the second time around.

Men need to protect themselves from being taken to the cleaners by a bitter ex, and women in particular need to ensure they won’t fall under the poverty line after a split. The recent Mission Australia report, Ageing and Homelessness: Solutions for a Growing Problem, painted a grim picture for older women who are left single after a marriage breakdown.

“Older women continue to be particularly vulnerable to later-in-life homelessness, due to factors including a lack of superannuation, financial dependence, and domestic and family violence,” Mission Australia reported.

As unromantic as it may sound, before walking down the aisle, it is prudent to discuss finances with your soon-to-be-spouse early in the courting stage. That is also the down-to-earth advice offered by the Government’s MoneySmart website.

It recommends that couples discuss financial goals and think carefully before putting all their money into joint accounts or using the same credit card. If things go wrong, it is harder to ascertain which portion of joint assets belongs to whom.

However, when it comes to bills – rates, utilities, health insurance and so on – having both your names on an account is wise. It is the only way to ensure that you are both responsible for paying the owed amount.

On business and personal borrowings, ensure that you will be a beneficiary of the funds. If you guarantee or put your name to a loan that will only benefit your spouse, you will still be responsible for payments, even after separating.

Conversely, if you both buy a house, ensure both your names are on the title. Or better still, speak to a lawyer about drawing up a tenants in common agreement, which will ensure your children’s rights to your inheritance are better protected if you die and your spouse remarries.  

Older women, especially if they have taken time out of work to raise a family, will not have as much in their superannuation funds as their husbands. There are provisions for a higher-income spouse to contribute to their partner’s funds to even things out so that the couple grow their retirement income in tandem.

After a split, it is trickier to access a share of your former partner’s super unless they have made you a beneficiary in a ‘binding’ nomination. Likewise, if you have a binding nomination in your super, insurance or a family trust, the assets will be distributed to your named beneficiary, regardless of what your will says.

If this is not your first marriage, you may have assets and children or grandchildren you wish to protect. Signing a prenup, such as a binding financial agreement (BFA), will spell out how far you are willing to share or not share any assets accumulated in the past with your new partner.

A BFA is only a legally enforceable document if you and your partner have consulted a financial adviser in writing it, and if it is signed and witnessed by both parties.

Long before you hear the sound of your own wedding bells, listen to advice from a lawyer about writing a will or power of attorney, and to professional financial advice from an expert about how a BFA can protect your assets so that you can have peace of mind, no matter how your relationship develops.

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Prenups and a new partner

Written by Olga Galacho

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