Financial Advice I Would Give My Younger Self – Planning for a Young Family – Kiplinger’s Personal Finance

As a planning expert frequently on the lecture tour, I often get asked, “What else should we know?”  I always look at the younger audience members and think – if only I knew this back when.  That’s the motivation behind this expert series on planning advice I would give to my younger self.  Last month, I penned the first of four articles and began with the topic of planning for education funding.  This month, I shall follow my younger self past college and my first job, and into the next “typical” stage in life – getting married and starting a family. 

When you meet the love of your life and are talking marriage, it’s often hard to think beyond the immediate excitement of the engagement, wedding, and honeymoon.  Yet, discussing your financial philosophy with your future spouse is critical.  You are, after all, entering into a contract to live your lives together, and therefore make decisions together, till death do you part.

Consider a prenuptial agreement

 Here’s the dreaded “P” word: prenup.   With people tending to get married later in life, it is more likely that one goes into a marriage having already obtained a certain level of assets, which need to be protected in case of divorce, quite possibly with a prenuptial agreement.   Matrimony laws vary in each state.  For example, community property states, such as California, Washington, and Texas, follow the general rule and presumption that assets are divided 50-50 with divorcing spouses. Meanwhile, equitable distribution states, such as New York, Connecticut, and Florida, use a variety of factors to determine what is “fair and equitable.”  

Not only does one need to understand the matrimony regime that governs their union, one needs to understand the nuances.  For example, in New York, while assets brought into a marriage are generally regarded as separate property that is not part of the marital assets division, earnings and appreciation from such separate property may be marital property that is subject to division. 

What happens when you comingle assets with your spouse and open a joint account?  What happens if your spouse contributes to the mortgage, but the title of the home is already in your name?  There are many of these types of questions that soon-to-be newlyweds with existing assets need to think about and agree on, so that there are no surprises if the marriage does not work. 

I fully can understand and appreciate how difficult the prenuptial conversation can be.   I always tell my clients – these are two consenting adults committing to a lifelong choice together.  You want to understand the terms of everything else do you do in life, however transactional and transient, a job offer, buying a car …….


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