Couples & Money: When Hidden Spending Habits Threaten More Than Just Your Bank Account
There is no doubt that disagreements over money can cause tension among couples and even destroy relationships. And although money may not buy love, handling money the right way could protect your relationship and your bank account.
So what can couples in committed relationships do to protect themselves legally from the financial infidelity of a spouse or partner?
Renowned attorney Gloria Allred offers the following tips:
Establish Ground Rules to Protect Your Finances
A recent survey on spending habits among American couples in committed relationships reveals that four in ten (40 percent) believe honesty about finances is more important than honesty about fidelity, yet nearly three in ten (29 percent) admit that they have withheld information from their spouse or partner regarding their spending on discretionary items (e.g. apparel, accessories, electronics and entertainment).
However, unmarried couples in committed relationships don’t have many of the legal protections given to those with a marriage certificate. So, in order to protect yourself from a partner’s financial infidelity, you should consider the following:
- Keep separate bank accounts
- Avoid contributing financially to buy an asset which will be held just in your partner's name
- Maintain your ability to support yourself separate and apart from any promises of support made to you by your partner
Rethink Cohabitation Agreements and Prenups
Contrary to what most people believe, prenuptial agreements are no longer just for the rich and famous. More people are popping the question with a few strings attached because it’s seen as an opportunity to communicate and make plans with their partners, rather than a hostile or adverse act.
Some of the benefits of having a cohabitation or prenuptial agreement:
- Allows couples to be open with one another about their finances
- Allows each partner to protect separate property so that it won't be considered a combined or joint asset if the relationship ends
- Allows each partner to keep their individual debts so that one partner will not be responsible for the debts of the other partner if the relationship terminates
- Can provide for children from a prior marriage
- Avoids legal battles over property issues in the event the relationship ends
Take Stock of Your Property and Assets
If divorce is on the horizon, take time to document and update all of your personal and marital assets. During a divorce, all of the property and assets you and your spouse brought into the marriage and accumulated during the marriage will be fought over. A judge will make the unpopular final decision on who gets what, often without much evidence to rely on, that’s why it is in your best interest to document and keep track of your assets, both personal and marital.
Document assets such as:
- Real estate
- Collections including pieces of art, jewelry, vehicles and hobby or sports equipment
- Bank accounts including checking and savings accounts, certificates of deposit, safety deposit boxes
- Life insurance policies and annuities
- Stocks, mutual fund accounts, investment bonds or other financial investments
- Trusts including a trust in which you are a beneficiary
- Pension and retirement benefits including profit sharing plans
- Businesses including any interest in ownership of a business
It is also a good idea to collect copies of receipts, statements, appraisals, transaction records and other financial documents related to each asset. So that your divorce attorney has all the information needed for your case.