The financial past can often be a thorny issue for new couples. That’s why many decide against merging their assets, preferring instead to build their relationship on more positive ground.
Others put off any real talk about finances until their better half pays off debts, finalizes arrangements with the ex and wipes the financial slate clean. But once this is done, how can the couple plan for their future in a way that’s fair to both partners? Should expenses be split 50/50 or in proportion to income? Once the couple makes this decision, they can open a joint account to save or pay for future expenses. But it’s also important to keep separate accounts to cover personal expenses—or in case of a breakup.
What about the kids?
Things can be even trickier in blended families, where each spouse has had time to grow a personal nest egg. In some cases, the children are old enough to understand what it means for their parent to have a new partner.
Blended families can also be more of a challenge because a couple’s decisions will affect all the other family members. This is particularly true when step-children or children with special needs are involved. What’s more, concerns over fairness can exacerbate family tensions. And the situation can be very delicate if one of the spouses has no children. If you have dependent children, take a good look at your circumstances. Figure out how much life insurance you need to ensure your children can maintain the same standard of living if you die prematurely.
A will is the perfect tool to protect your children while giving your partner their fair share. You can define your wishes, leave special bequests and set conditions on the use of inheritances (for instance, if money is left to minor children or children with special challenges).
People often shy away from talking about money and avoid taking action. However, it’s something that needs to be addressed early on in a relationship. By clarifying money matters, you’ll eliminate at least one source of conflict. A written agreement between common-law partners is another option to consider; it provides protection in the event of conflict, separation or death.
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