By Amanda Morrall
GST Club, STINKRS, STDS. Welcome to the world of financial heartbreak.
Allow me to decode the bizarre lexicon that is the staple of divorce lawyers and trust specialists.
The first, (GST Club) is in reference to the financial ruin facing the unlucky in love individual who experiences a trifecta of failed relationships. In the unfortunate event of three flops, where co-habitation for a three year period was the result, the hapless divorcee's assets are reduced to about 12.5%. (That formula was before the GST increase.)
STINKRS? These are the one's hoping to avoid the GST club because they're either separated (or divorced), or they've been taken to the cleaners and are not keen on a repeat.
STD? Sexually transmitted debt.
Call them the financial hazards of love. Celibacy is one way to guard against the above. Being realistic, smart and taking preventative action is another.
Here's my five-point plan for financial well-being.
1) Protect your assets
Whether you're coming into a serious relationship for the first time or plunging back in, take stock of your assets and figure out what you have to lose, potentially, if things were to go wrong. After three years living together (less if someone is coming into the relationship with a child), what's yours is theirs and vice versa. In the event of a break up, it's 50/50. Ask yourself if that's something you can accept and live with being realistic about the brutal repercussions. If not, then you should consider whether a trust might be appropriate or pre-nuptial agreement defining what belongs to whom in the event of a split. Keep in mind that the rules around trusts are changing and a trust that is established after the relationship hits the skids may not stand up in court. Some financial foresight will go a long way to protecting your assets.
2) Have the talk
Don't wait until after you've moved in together to find out what kind of debt your partner is bringing into the relationship, how they manage money and what their long-term goals are. Good communication is the foundation of a healthy relationship. If you want to avoid fighting about money it's best to know well in advance one another's assets and liabilities, your unique financial strengths and weaknesses and have some established ground rules, or at least a general agreement, about who and how money will be managed. Having regular discussions or meetings to review the state of your financial affairs is also helpful.
3) Good credit, bad credit
If you're teaming up financially, taking out joint credit cards and joint bank accounts, then be aware that you're jointly on the hook for any debt. If one party starts to run amok with the credit cards, after you've split, creditors can hold you accountable for it financially. Trust is key but if that trust is broken and there's money at stake, and your financial reputation, put the breaks on as soon as possible. The new positive credit reporting system allows you a 14-day period to put a freeze on your credit record, so you can contact any lenders to advise them of the situation while you deshackle yourself financially by closing joint accounts down.
For more see my interview here with John Scott of credit reporting agency Dun and Bradstreet.
4) Co-piloting
One party may excel at excell spreadsheets and thrive on playing chief financial officer, however surrendering financial control or keeping your head in the sand is risky even if the relationship is rock solid. If for some reason the person running the show is unable to do so, it could create all manner of problems and financial strife as well as stress. Holding regular summit meetings to review the family finances is a good idea or periodically getting the co-pilot to take the wheel will help to establish some balance.
5) Eyes on the prize
Having common goals or a shared vision of the future is financially advantageous. Not only does it unite you as a couple emotionally and philosophically, but having shared goals will influence how you structure your finances which can have the effect of helping you to achieve your goals faster. Two is better than one if you're on the same page.
To read other Take Fives by Amanda Morrall click here. You can also follow Amanda on Twitter@amandamorrall
20 Comments
Sadly this is all good advice. Never had to step through the journey myself but have friends who are doing so even now and money seems to bring out the very worst in people. Even after an affair that ended the marriage somehow self righteousness manages to get in there.
My limited experiences have suggested to me the outcomes are not gender neutral.
An important subject Amanda...probably the wrong forum....honesty of this kind when sharing is probably a bridge too far for most here.
I've always put a lot of stock in the expression "walk a mile in my shoes" and viewed moments in my marriage with that in mind.
It's easier to be hurt than to attempt understanding.....
38 years and funny enough the money doesn't mean too much anymore in respect to who gets what, because the loss in relationship terms would be insurmountable...to me anyway.
My advice to those who cannot get past the moments for good reason or bad is to find some common understanding about the division of property rather than let third parties reduce it's final value through litigation........
On Pre-nups ..there is no good time to have that talk for the minor shareholder, but if felt necessary, should be had whether or not it becomes the first wedge in the relationship.
The failure to relate your aprehensions in the begining will only lead to failure to disclose other pertinent details later...(I have seen that first hand on any number of occassions)
Good column...deserves more response.
I guess there are advantages to both parties coming into a relationship with no asset (or not much anyway)!
We have a running joke about money - he tells me he always knew I'd be an asset for him and I tease him that maybe I should have rated money a bit higher on my "man-scale". We haven't done too bad so far but it never occurred to either of us to take measures to protect what we've got from each other. Same as Christov, only 16 years but if our relationship fell apart money would probably be the last thing on both our minds.
I do try to interest him in our finances though and regularly reminds him that he might want to know what we have, where we have it and how to access it. What's that if not blind trust!
They laughed when we married at 22 and 21 but we had nothing so I guess that worked okay.
I have seen bitter recriminations after 32 years of marriage though. Betrayal can lead to arguments about the wealth that was accummulated over these decades. Especially if you are looking at the end of your career and wonder where the recovery will come from.
Good for you, it's nice to hear about positive stories. We met when we were 21 and 22. I'm rather glad (seeing that things have worked so far) that we were a bit naive and didn't even think about all the possible nasty financial problems that might arise.
I can't say I am too worried about what might happen later on in life - he's told me on more than one occasion that if I left I could have everything, he'd be done with women and would become a missionary in Africa (lol, sounds slightly over-the-top to me. Either that or I must be truly awesome!). And I told him I wouldn't want anything either anyway so he'd have to take it... so we've (formally) decided that in case of a break up everything would go to the kids.
If you are going to do a pre-nup don't wait until you have been together for years. Some friends had been together for 4years and were going in to business together. One party was contributing more than the other so they both agreed a pre-nup would be the best way to protect their own assets etc. Not so said the lawyers as relationship property Act would have already being triggered. Couple spent considerable money in getting one drafted anyway but then decided not to go ahead and sign it. It ended happily with eventual marriage and a sucessful business.
Check your wills and update them regularly especially if a relationship fails, there are children and you enter in to a subsequent relationship.
Sadly all good advice. But if you'e going into a serious rrelationship with this kind of mind set then deep down you know it's not going to work IMHO. The wife and I are totally transparent on where the money goes, put aside a little when first married for whatever and share everything through joint accounts. Money is important but isn't an issue.
Thanks Amanda, all very sensible advice. My ex was terrible with money, we split things down the middle and went our seperate ways but 4+ years later (when he had successfully used all those $'s up) and after our divorce he decided he wanted to claim my family land (an inheritance) which was being held in trust for our children, for many years before we split. Through his barrister he got busy claiming screws, nails and anything he thought he could remotely lay claim to, in an attempt to force the sale of the property which had been in my family since the 1800's and was to be passed down to his children. He was also blackmailing me on the side to hand over a few more thousand more for him to drop the case. He finally gave up when he realised the cost and futility of it all but I could never have envisaged this in my wildest dreams. It's like stealing from your own children...
Shack up with an Asian lady , Ivan ....... then when the shit hits the ..... oooops ! ... I meant to say " if " the poop hit the fan , and she biffs you out .... you'll know how to knock up your own cozy little hut out of bamboo ......
..... magic stuff , bamboo ..... disappointed that Hugh P. didn't take me seriously when i suggested a bamboo re-build for Chch ..... it's cheap , flexible & quick ..... everything that CERA & the CCC isn't !
It's not always the woman the asks to move in Ivan. I have a friend where it was the guy who wanted her to move in and sell her house. She said only on the condition he also sold his house and they bought together. It sorted a lot of issues with single adult kids no longer living at home feeling like that they had claim to a say in any cosmetic changes in 'their home'.
Also know of a professional that kept his house and she kept hers, but she used to stay at his 3/4 nights a week. Relationship lasted just over three years like this when he called it a day. He found out what 'hell hath no fury like a woman scorned' meant. A clever lawyer and she ended up with half his house.
Some interesting advice/information I received recently when discussing my own bad decisions over choosing the mother of my children. It came second hand from a priest via a tour guide.
It seems the priest could always tell when a relationship was going to last based on the attitude of the participants. If they were there for the marriage first, or saw the marriage as carrying the greater weight than their own wants, then it would last. Where one or both partners were their to fulfill their own wants or needs then eventually it would fail. Self centred equals a fail if you like. Not sure I have articulated it quite right, but I think you will get the drift of it.
Makes you think, that is for sure.
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