Planning to spend your life together with your partner is an exciting time. But it can be fraught with expectations, tough financial decisions and conversations. Especially if you’re marrying someone with no money or who is struggling financially.
Although marriage can be financially beneficial, sharing the wealth — and the debt, and the investment portfolio — can make you feel like you’re paying more than your fair share. Setting financial expectations from the start is important for protecting your assets in marriage. Relationships change if one partner comes into it with financial baggage.So how do you protect yourself and your finances? Here’s what you need to know about marrying someone with no money (or limited money responsibilities).
SUBSCRIBE: Get the HerMoney newsletter delivered to your inbox 2x per week! It’s jam-packed with tips and tools for managing money with a partner and more.
Start With an Honest Conversation
To protect yourself before marriage, sit down with your partner and have a candid conversation about money. “Before you wed, you should explore values,” says Lynn Ballou, Certified Financial Planner and regional director of EP Wealth Advisors in Lafayette, California. “[This includes] budgets, debt, lifestyle, retirement goals and plans, children and college, and so much more. As you do so, it’s OK not to agree on everything. “If you are on opposite ends of the saving and spending spectrum, it could cause some tension and conflict down the road. Meet with a financial counselor to help start these conversations. Having a neutral third party can help both of you work through these money discussions.
Carla Dearing, a financial expert and CEO of Velo, suggests asking several different questions of your soon-to-be spouse to get a more complete financial picture. Start by sharing your credit reports, she says.“Any joint account you open will [trigger] a credit report check for both you and your spouse,” she says. “If your spouse’s credit is too poor to use for a home or car loan, you may be tempted to take on those financial responsibilities on your own.”
Note, if you take on debt during the marriage, it doesn’t mean your spouse will be absolved of any responsibility when it comes to repaying the loan. “This would be marital debt to be divided according to state law,” explains Lisa Zeiderman, the Managing Partner at Miller Zeiderman LLP, a New York-based family law firm.
That said, in some cases, a postnuptial agreement could act as an extra safeguard. “A postnup, if properly drafted, would usually be enough to guarantee that the spouse using their credit for the shared expense is responsible,” she adds. “That being said, the postnup must be written to be enforceable and not every state recognizes postnuptial agreements.
Discuss Debt
Asking your potential partner if they have a lot of debt is another big one. “Debt can put a big strain on a marriage,” Dearing says. “Legally, you’re not liable for debt your spouse had before you got married. But once you’re married, you will likely be involved in paying off your spouse’s debts. That’s why it’s important to be open about how much you owe before you get married. You’re building trust and teamwork by deciding together how to handle debt that’s still on the books.”
Consider A Prenuptial Agreement
If you’re marrying someone with no money or who is facing financial challenges, should you pursue a prenup? Dearing says it depends on the situation.
“If you’re getting married for the first time and either you or your spouse have significant assets or debts, it can be a good idea to plan how to handle these if the marriage doesn’t work out,” she says. “Don’t think of a prenup as a negative. Entering married life with these decisions made beforehand may take some pressure off your relationship. It’ll let you focus on enjoying your life together.”
Prenups can be especially beneficial if you or your partner have children from previous relationships. “It’s not about anticipating the failure of your marriage,” says Dearing. “The context of a prenuptial agreement should be, ‘How do we protect and provide for our extended families?’”
In this case, the prenup ensures your surviving spouse doesn’t change your estate plan. It also makes sure that your property will pass along to your children from a previous relationship rather than to your new spouse. It can even allow you to waive rights to your spouse’s life insurance or retirement to make your children the beneficiaries, Dearing explains. You can present it in a positive or inclusive way, like making it part of your joint estate plan. Just make sure you have your own attorney review your plans before you sign anything.
If you don’t have children from a previous relationship, a prenup is much less important. In some cases, it could be counterproductive. So, evaluate each situation on a case-by-case basis and ideally, with the help of a financial professional.
FIXX YOUR FINANCES: Join Jean Chatzky’s money makeover program, FinanceFixx. Get a coach, learn to make real changes, and see sustainable results fast.
Protect Your Assets
Keeping your assets safe and secure should be a priority before, during, and possibly after marriage.“You want to ensure your separate assets remain separate and that you protect your finances from future divorces [or] future access to someone who’s untrustworthy,” says Loretta Hutchinson, founder of Financial Divorce Plan LLC, and a Certified Financial Planner and certified divorce financial analyst. While every state has different laws, generally, once you start combining assets, they become “marital assets.”
The Bottom Line
Marrying someone with no money, or who has significant financial challenges shouldn’t hold you back from tying the knot – you just have to make sure you prepare. That can include the above steps, as well as setting financial goals together, reviewing insurance policies, creating a will and updating your beneficiaries. Having these tough financial discussions may seem unromantic, but it’s important to keep the big picture in mind.
“Differences in spending habits and financial goals are precursors to divorces — and one of the biggest reasons why people divorce,” Hutchinson says. “(You want it to be) the strongest possible start…so when challenges arise, you have already had these conversations and don’t have to start from square one. It doesn’t mean you don’t trust or love (your spouse.)”
MORE ON HERMONEY:
- It’s Time To Have A Money Talk With Your Partner
- The Financial Pros And Cons Of Marriage
- Ask These Five Questions Before Merging Finances With Your Partner
COMPARE: Looking to build your savings before marriage? Compare online savings rates from our partner Fiona.
