BEST guide on Prenups & honest financial conversations before marriage

Congratulations!  You're engaged or thinking about saying "YES!"...or maybe you're the one thinking about doing the ask, having found the right one.  (Well done!)

But hold on.  You are making one of the biggest decision of your life.

Before you start thinking about the who-what-when-where-how's of your wedding, consider for a moment what will be the financial impact of marriage on your life.

If you're even considering a prenup, have an honest (and perhaps brutal) conversation with your significant other about money BEFORE the wedding.  And even if you're not considering a prenup, STILL have the conversation.  Likely several conversations before you both bind yourselves in legal and financial union. 

This is the BEST guide we've seen on prenups and how to have a serious discussion about money between those who want to get married. 

Send it to your sisters, your girlfriends...send it to anyone who's thinking about getting married.

This One's for all the "Non-Typical" Partners

This week our message is for all the women (ex-pats, common-law/same sex couples) who have "non-typical" financial concerns living here in the UK. 

There's no doubt about it, navigating the tax landscape in the UK as an Expat, Non-Domiciled individual, or part of a Same-sex partnership is challenging. At different phases of life in the UK, the tax rules suddenly shift, making non-typical individuals more vulnerable to tax complexity. Understanding when these tax changes happen can help you plan ahead to be financially prudent, and NOT run afoul of the HMRC or its equivalent abroad.

This is one area were we STRONGLY recommend you don't just rely on word of mouth and SEEK PROFESSIONAL ADVICE.  (Please.  For your own sanity.)

Below are the key takeaways from London 2016 Forum breakout discussion on “Overcoming Financial & Legal Challenges for Non-typical Partners” led by Tor Flonaes of Maseco Private Wealth. 

New UK tax changes make it harder to keep offshore money off the tax grid.  For example, effective April 2017, HMRC will levy tax on your worldwide assets and your global income if you have been resident in the UK for more than 15 out of 20 years.  With this new change, individuals are also exposed to inheritance tax on worldwide assets as opposed to just assets based in the UK.  Be careful if only one spouse is domiciled and the other is not - special provision must be made for transfers between spouses to not bring about a tax charge.  

Americans: Get a US/UK accountant who can take care of tax filings for both.  Being an American abroad is especially complicated as the US mandates global taxation on citizens even when living abroad. Having someone who understands both the US and UK tax rules is critical for reliable advice before making financial transactions and considering the timing of US and UK tax years (e.g. you can potentially have favorable tax treatment filing gains in one country first, and then the other). 

UK Common-Law Couples: Did you know?

  • If you're married, WITHOUT children: whole estate passes to spouse outright
  • If you're married, WITH children: spouse receives half of the estate, children receive remaining 50% 
  • If you're not legally married, WITH children: entire estate passes to children, surviving partner has no entitlement

Ultimately, ask around (including on our Facebook page) to find recommended professionals for advice if you are not sure of your domicile/tax situation.  Sites such as VouchedFor and Unbiased can also be useful resources in beginning your search for the right specialist advisor(s).

(*NOTE:  We have no relationship whatsoever with VouchedFor or Unbiased.  They are simply mentioned here as a possible source of useful information.)

What are your thoughts?  What advice can you share from your experiences preparing for your life's major financial moments?  Please share your thoughts with us on Facebook here.

Life's Major Financial Moments

This week, we share the key takeaways from our London 2016 Forum breakout on “Preparing for Life’s Major Financial Moments”, led by Margaret Kelly of Josiah-Lake Gardiner Solicitors & Ruth Sturkey of The Red House.

  • Entering into Marriage or Partnerships:  Consider getting a pre-nuptial agreement.
    • Before you get married, discussions about a pre-nuptial agreement can help you and your partner determine how to sort your finances if the relationship does go awry.  It’s like life insurance; hopefully you never need it but at least you know you are protected if things do go wrong.  More importantly, discussions around the pre-nuptial can help to work out future "kinks" in your relationship.  Money is the number one reason for arguments between couples.  Working out a system of financial understanding beforehand can help reduce the need to trigger the pre-nuptial agreement.  
    • If you’re not planning on getting married, it’s even more imperative that you have a legal agreement in place with your partner; a woman can’t just assume that she is a “common law” wife. 
    • And for those of you who are married, a post-nuptial allows you and your partner to settle your affairs and assets in the event of a separation or divorce. In general, it’s always better to be up front about things with your partner as soon as possible and discuss things while the relationship is still “looking up”, as they say.
  • Caring for Elderly Parents:   Set up Power-of-Attorney and Medical Directives.  
    • Introducing the topic of a Living Will may be a good way to open the conversation with elderly relatives on what their wishes should they become incapacitated and/or when they pass. 
    • Specifically, put a legal Power-of-Attorney in place while your relatives are still sound of mind. This will allow you to make decisions on their behalf.
    • While putting in place a Power-of-Attorney, also set up a Medical Directive at the same time.  This will allow you to make medical decisions on your relative's behalf. 
    • If your relative is receptive, discuss the concept of Last Will & Testament, or at the very least have him/her update beneficiary forms across their accounts.  (This applies to partnerships as well.) 
  • Caring for your loved ones:  Set up your legal Will.  
    • If you have a very straightforward situation, there are online services that can produce a Will for as little as £200-300.  Though if your budget allows, it is best to seek personalized legal advice. 
    • You may need multiple Wills if you hold assets in different jurisdictions.  You will need to seek local advice from each country or a specialist who is familiar with the legalities of each country you are dealing with.
    • While personalized legal advice is still the preference, using an online service is still better than doing nothing at all. 

What are your thoughts?  What advice can you share from your experiences preparing for your life's major financial moments?  Please share your thoughts with us on Facebook here.

Discussing Your Financial Future with Your Partner

When was the last time you and your partner had a chat about your financial future?  Do you know where your money is invested and how to access the funds if something were to happen? 

There's no one right way to manage joint finances, but having regular discussions with your partner about your finances can make a big difference to your financial future.