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Planning in a partnership

Friday, January 7, 2011
Do you have a financial plan for your marriage or partnership?
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Article from Sorted.org.nz

Are you in a partnership?
If you're married or in a partnership, it can be difficult to imagine it ending. But planning for this eventuality is like home and contents insurance — you hope you'll never need it, but you know you're better off for having it.

When you're making a financial plan, it's really important that you're both involved in the process and that the future financial security of both of you is taken care of.

If you are married, in a civil union partnership or in a de facto relationship, even if you are a same-sex couple, and your relationship ends by separation or because one of you dies, you will be aff ected by the Property (Relationships) Act (the PRA). Th is act came into force on 1 February 2002. It replaces the Matrimonial Property Act 1976, which applied only to married couples. Make sure you know how the law change affects you and your partner.

Do you think the same about money?
Everyone's attitude to money is different. You may well have very different ways of approaching money matters. Money is one of the big issues that couples often disagree about. This is natural, because managing money involves human nature! Try to understand the other person's needs and aim to work constructively through your financial planning together.

Compromise!
When two people are managing money together, it's only natural that there'll be differences of opinion. Make sure you talk about your finances openly and honestly and be prepared to compromise with each other.

The legal bits
You should know how your financial situation would be affected if your relationship were to end.

It's easy to assume that the law will take care of us if a relationship ends or one partner dies.

But ask yourself:

  • What do you both want and expect from your financial plans?
  • Do you and your partner have a superannuation scheme? What happens to the scheme if you or your partner die? Does the other partner continue to benefit from it?
  • If you're making a financial plan for retirement together, will your plans be sufficient if you both live well into your eighties?
  • What happens if you are separated — by death or otherwise — before you reach retirement age?
  • Do you have life insurance or income protection (in case you or your partner are unable to work)?
  • If you share a mortgage, will payments be covered by mortgage or life insurance if your partner dies?
  • Are there debts that you are liable for?

Get independent legal advice to ensure that the plans you have in place are fair to both of you.

The New Zealand Law Society has a range of information available from their website. This includes:

  • Making a will
  • Estate administration and enduring powers of attorney
  • Buying or selling property
  • Living together
  • What happens if your marriage breaks up?
  • What is a trust?

It pays to get legal advice
Getting good legal advice can be a valuable investment to ensure your financial situation is protected should one of you die or if you separate.

SortedArticle provided by Sorted.org.nz. The Retirement Commission's free and independent website Sorted.org.nz is packed with helpful information, tools and calculators to help you manage your personal finances.