On my recent news sweep, I came across an article of yet another couple fighting over the split of their assets following a divorce. Indeed, such news items are increasingly commonplace in today’s media. And with that, to prenup, or not to prenup is fast becoming a popular topic in today’s marriage cycle.
While prenuptial agreements are not currently legally binding in the UK, they are now used as key reference for court decisions. Following the groundbreaking Radmacher V Granatino case in October 2010, British courts now consider prenuptial agreements as enforceable under British divorce law, as long as certain safeguards have been met. But what if you never broached the topic of personal finances or prenups prior to marrying your beloved? And what if your marriage breaks down: what safeguards have you set in place to ensure a smooth transition into the next stage of your life?
An ex-client, a Global Director at a Fortune 500 company who built up a sizeable pot of wealth prior to his marriage of eight years, was left distraught after fighting his ex-wife over the split of their assets. The matter had put a strain on his relationship with his current partner, caused him considerable stress and affected his work performance. In essence, what was meant to be an amicable divorce, went south when it reached the financial settlement stage. And what this crucial stage brought to light were the numerous issues that were left undiscussed prior to and during the course of their marriage.
When getting married, a prenup is not a matter most couples wish to discuss. Understandably, no one wants to think about, let alone discuss, the possible end of their marriage when it is just about to begin. However, it is worth thinking of a prenup as an opportunity to openly discuss your finances with your future spouse.
Here are some tips to initiate and navigate that tricky conversation.
1. Make it a conversation
Honest communication about your finances, plans, and values never hurt. Talking about your future together should not be one-sided – your intended should also get a say. Have a conversation instead of issuing demands. Try not to react or formulate a response until your partner has finished, so that when you do respond, it shows that you are listening and trying to understand their position. Here are a few points to also consider:
- Do you know about your future spouse’s credit history? Before getting married, it is imperative to talk about all the debt you each currently have. It is also good to discuss both the possibilities of accumulating new debt in the future and how each of you would handle that situation.
- Do you have the same spending habits? The both of you do not need to have the same philosophy when it comes to money. One of you may be a spender and the other a saver. What is important is that you both communicate and recognise your own goals and each other’s goals. This will ensure that both of your financial needs are met.
- What jobs will you each have and what income will you each bring in? It is important for both of you to have the same expectations of how much money you will each earn for the duration of the marriage. Will both of you continue to work if you have children? Are career changes likely for either of you in the future? These questions are worth discussing.
- What are each of your assets, savings, expected future inheritance? If there is a wide difference between your assets and those of your future spouse, now is a good time to discuss how best to manage these in the future, plan for a will, set up a trust or have a prenup. Put it this way, when you buy a family/ matrimonial home, you would always buy a home insurance policy. Likewise, you may even consider buying life insurance and assign the beneficiary to your spouse. Of course you don’t intend to have an emergency, but it is a sensible move, just in case.
2. Be upfront about your reasons, concerns and fears.
If you have concerns about your financial future together, now is a great time to voice them. Discuss your fears about what a prenup means to you and about what the future may hold. Rather than seeing this as a negative, this can be turned into a positive: the discussion could provide a solid basis for the both of you to truly commit to ensuring the long-term survival of your marriage.
3. Do not be defensive and try not to get worked up
Remain calm, rational and focused on the discussion rather than letting things get personal. Not everyone will take this conversation in their stride. Approaching the topic in a calm demeanour will ensure your conversation runs smoothly.
4. Listen attentively, ask questions and try to understand
Listen attentively to your future spouse and let them finish what they are saying before you speak. If things do get heated, strive to understand their point of view by asking your partner questions about their objections, concerns, or beliefs. Allow space for them to speak and let them finish speaking.
5. Be prepared to try again.
If your discussion devolves into a fight, take a breather and try to talk again later. Allow your future spouse time to cool off and re-evaluate your points. Consider the services of a mediator/ relationship coach to help both of you air your thoughts, without things turning sour.
6. Take a leap of faith
It may be a difficult conversation but it is important to not fear upsetting or disappointing your future spouse in order to express your needs and feelings honestly. After all, if you cannot come to an agreement by this point, how would you expect to live the rest of your life together, when life could get harder and bumpier further down the road?
Until a century ago, it was not at all unusual for a couple’s parents to meet and discuss dowries, finances and inheritances prior to the couple’s marriage. The families’ approach to marriage was not so dissimilar to how one would approach a business deal. And in some of today’s cultures/circumstances where for instance personal finances are linked to family finances, that approach is still current.
However, for the rest of us who now largely live in a world where our personal finances are independent from that of our families, and where finding a partner falls solely on ourselves rather than on our parents, it is up to the couple to take on the task of discussing with each other, their finances prior to marriage. Understandably, this is neither easy nor romantic. But to have such an open dialogue is the best way forward to ensuring that you are entering your marriage on an equal footing.
So to prenup or not to prenup? That is a matter for each individual couple to decide. However, it is time to revolutionise our personal views on modern day marriage, and at the very least, have an honest conversation with your future spouse about your financial past, future and goals.