In the process of creating a strong family, romantic love relationships are often replaced by harsh everyday life, an unstable financial situation and a lot of problems that need to be solved on a daily basis.
The lack of strategic planning and a clear family budget often leads to very sharp and serious conflicts that can destroy the marriage and the fate of the newlyweds.
By entering marriage, spouses inevitably pool their savings and debts. What do I need to know about joint finances before the wedding?
In most legislation the property owned by each of the spouses before marriage is their property, and if the money was put into an account before the marriage they remain the savings of the spouse in whose name they are registered. But if the money is deposited into the same account during the marriage, then the amount by which the deposit was made is already considered joint. Also, if the family has significantly increased the value of property that belonged to one of the spouses before the marriage, it may be recognized in court as common.
Debts incurred before marriage, just like property, belong to the person who acquired them.
If one spouse has credit obligations, including mortgages, the other spouse is not liable for those contracts. But after the marriage, the money that goes to pay off the loan is common. Therefore, the borrower’s spouse does acquire rights to the apartment, car, and other property taken on the loan, and will be able to claim half of the payments that were made during the marriage in the future.
There is an excellent legal practice that can protect the parties from possible conflicts – the prenuptial agreement. The parties calculate and take into account in the legal contract all possible ways of development of events, as well as ways of their resolution. In the prenuptial agreement you can write not only the rules of the division of property in the event of divorce, but also the financial obligations of the spouses during cohabitation: the order of payment, responsibilities for mutual support, etc.
If this is unacceptable for the newlyweds, a clear and accurate financial plan can be of great help in terms of finances. Experts advise to regularly discuss financial matters, keep track of expenses, and set aside 10% of monthly income. This is a “financial cushion” for emergencies.
If one of the newlyweds’ parents will help pay the loan, financial consultants recommend creating a separate account to which these funds will go, and drawing up an endowment agreement. As for new joint loans, any financial action in the marriage should be considered from the perspective of the interests of both newlyweds.