Becoming one household

If you and your partner have different financial outlooks, having frank and ongoing discussions about money will be critical. Here are some topics to consider.

The better you communicate about money, the better your chances for a successful relationship. Take time to gain a clear picture of your financial future together. Clearly understanding the following can pay off down the road:

Salaries or self-employment income
Other sources of income (such as trusts, family support)
Any additional money either of you expect to receive

Credit scores
Existing debts
Insurance plans
Interest and dividends from investments

The Net Worth Statement Worksheet is a great place to start.

Approximately how many U.S. adults who are in live-in relationships are hiding a checking, savings or credit card account from their partner?¹

Yes.

In fact, Millennials have the highest rate of currently hiding an account from their spouse or partner at 28% compared to older generations at 15%.

It’s 29 million.

Millennials have the highest rate of currently hiding an account from their spouse or partner at 28% compared to older generations at 15%.

Tip

Looking to start off on the right financial foot?

Read our article on Marriage and Money: 10 Tips for Financial Bliss.

Yours, mine & ours

Determining whether to pool assets or keep them separate, or deciding how you’ll handle income, expenses, saving and investing is an individual decision. There is no right or wrong answer. Some couples wouldn’t dream of keeping their finances separate. Others (especially if one partner brings substantially more assets or debt to the relationship) may wish to protect the assets they bring to the marriage with a prenup and/or a trust.

Common Law Property

Most states adhere to common law marital property provisions, where only property and debts acquired by the parties during the marriage are subject to equitable division.

Community Property

In the handful of community property states, assets owned by one spouse prior to the marriage, or gifted to/inherited by one spouse during the marriage, are generally considered separate property.²

5 Steps to more honest financial conversations

You and your spouse/partner may be entering the relationship with very different financial values, attitudes, behaviors and resources. So careful planning and a lot of frank upfront and ongoing discussions about money will be critical.

1.

Create a saving, spending and investing plan that you both can live with. It will help avoid future conflicts and minimize any unpleasant surprises.

2.

Set aside one day each month to monitor income and expenses, talk about your wealth goals and review your overall financial wellness.

3.

Every few months, invite your financial advisor to work with you on a specific planning area (for example, education saving, insurance planning or retirement planning).

4.

Don’t be afraid to share your financial concerns or fears (for example, maybe you’re worried about your spouse/partner taking on too much risk with your joint investments).

5.

Stay positive and upbeat. Avoid criticizing decisions or assigning blame. And focus on positive actions you can take in the future rather than dwelling on past mistakes or missed opportunities.

Review your insurance

Could you save money by becoming a dependent on your partner’s health insurance rather than maintaining your own employer coverage? Do you need additional life or disability insurance coverage? Ask yourself these questions:

Who relies on me and my income?
How long could they maintain their current lifestyle with only our accumulated assets?
What would happen to my loved ones if I can no longer earn an income?
If I lost my job, could I afford to replace my insurance?

Take your time

You may want to jump right in and begin combining your finances. But mistakes can be very costly and difficult (if not impossible) to undo. So be thoughtful and deliberate, and ask questions that will help you avoid potential pitfalls such as:

It may seem easier to combine credit cards. But with shared credit comes shared liability. Depending on your respective credit histories, it might be best to keep your own credit cards.

Think before co-signing any loans. It may seem like a good idea to use your higher credit rating to help restructure your spouse’s student loan debt at a lower interest rate, but make sure you realize that doing so will make it a shared liability.

Keep in mind that the way you title property (such as real estate, bank accounts, investments and personal property) will have legal implications. Check out the Defining a Legacy page for more details on asset titling.

Plan ahead

For married couples, laws automatically protect the interest of spouses. However, that’s not necessarily the case with unmarried couples. So, it's critical that you establish and maintain documents that reflect your wishes for each other.

Domestic Partner Agreements

Similar to prenups, these legal documents outline
the sharing of income, expenses and property,
as well as your intentions for asset division.

Disability Planning

Creates durable powers of attorney, healthcare powers of attorney and guardian documents for any minor children in the event you’re unable to manage these matters.

Estate Plan

Consider what you want to happen to your assets when you die. An estate plan sets out the actions needed to realize those intentions and ensures the right documents and beneficiary designations are in place.

It’s always a good idea to consult your personal legal advisor before making any
planning decisions.

Connect with a Private Client Advisor

¹CreditCards.com. April, 2019 (Latest Data Available).

² Once individual assets become mingled with community property to the point they can't easily be separated (for example, depositing an inheritance you receive from your parents into a joint account), those funds legally become joint marital property.