With wedding season fast approaching, countless soon-to-be-brides across the country are rushing to pin down the final touches for their special day. However, amid painstaking colour scheme deliberations and last-minute guest list reshuffles,Larry Masson, Financial Adviser at Momentum Consult, warns against walking down the aisle without ensuring financial alignment and protection.
“While the ‘business side of marriage’ may seem unromantic – especially at a time when emotions are understandably running high – the reality is that money is notoriously one of the biggest sources of conflict in marriages, so it’s best to get on top of it before it gets between you and your future spouse.”
When it comes to financial planning, Masson says that marriage is like any other major life event, and should be handled with the same level of orderliness and responsibility. To make this process as quick and painless as possible, he provides the following pre-wedding financial checklist to consider:
1. Decide on a marital regime
As there is no right or wrong option here, Masson emphasises the importance of choosing a marital regime that is suited to you and your spouse, after understanding the three available options. “If you opt to get married in community of property, your assets are combined in a joint estate; while getting married out of community of property means all assets are kept completely separate throughout the married.
“Then there is the option of getting married out of community of property with accrual, where what you came in with remains separate, and only the assets accumulated during the marriage are shared,” he explains, adding that this third route tends to be a popular choice nowadays as it is widely viewed as being the “fairest” option.
2. Draw up a prenuptial agreement
If you decide to get married out of community of property or out of community of property with accrual, Masson points out that a prenuptial agreement is required. “This is a legal document that lays out the division of assets in the event that the marriage should end,” he explains. “A prenup, however, should not be seen as ‘planning for failure’, but as a safety measure. If everything goes well, it is just a piece of paper that you will never have to use, but if things don’t go to plan, it will make matters a lot less complicated.”
3. Consolidate all policies and benefits
While some couples want to keep a sense of financial independence, when it comes to policies and benefit schemes, Masson says it makes financial sense to consolidate. “This comes down to simple economy of scale economics, and avoiding the unnecessary duplication of policies. After all, you don’t want to be paying twice for the same benefit or paying more than you need to be when it comes to insurance and medical aid.”
4. Update your beneficiaries
As getting married has such a major impact on so many aspects of your life, Masson says it is a good time to check that all the beneficiaries listed on your current policies are up-to-date. “In addition to ensuring that all existing information is accurate, you’ll probably want to add your new spouse as a beneficiary if they aren’t one already. If you’ve never had a reason to get life insurance before, this may also be a good time to consider that.”
5. Put all your cards on the table
Finally, Mason highlights the importance of full financial disclosure and open communication when entering into a marriage. “When joining two lives together, no matter how you slice and dice it, financial fairness depends on what works best for you and your spouse, so honesty and transparency is key.
“As this can be a tricky and overwhelming subject to approach objectively, working with a financial adviser may help to ensure mutual awareness and understanding of the various financial complexities around marriage. Tackling these hard-hitting issues head on will create a solid financial foundation that will stand your marriage steady for the future,” Masson concludes.