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W & K

Blending Families

So, you have been dating over a year. Things are going well, and you have decided that you both want to move in together. So, you think all you need to do is sell your house, and move into his or her place, book the moving truck and get on with it. Sadly, this is not the right answer for either of you.

It is all too easy to get swept along in the thrill of the moment. However, you need to stop and take a practical look at how this next major step could impact on your financial situation. You need to consider the protection of not only your own assets, but also your future partner’s and how any joint assets will be owned. This becomes even more important when there are children from previous relationships involved.

Once you are married, or have a Civil Union, or have been in a de facto relationship for more than 3 years, all property of the partnership becomes “relationship property” unless you contract out. The most commonly used term for an opting out agreement is a pre-nuptial.

There are some simple steps you can take before taking the plunge into co-habitation. These could make things a lot more straight-forward if things either don’t work out or one of you were to die.

This can possibly be a difficult and delicate subject to raise. Remember that this is not just important for you. It is important for him or her and any family you have. It is not about whether you think the relationship will work or not. It is about ensuring you are on the same page with your current financial situations, and how future assets and income should be handled.

The chances are that your partner has been thinking along the same lines anyway and will be relieved you have broached this. You should talk to your lawyer first to ensure you have looked at your situation thoroughly. You will both need to seek independent legal advice if an opting-out agreement is required. Here are some things to consider:

  • Do you want to keep your existing assets separate?
  • If you have children, would you want them to benefit from your assets if anything happened to you?
  • Do you currently have a family trust and what stage are you at with your gifting programme?
  • If you don’t have a trust is this something you should be considering?
  • Do you have any company shareholdings or are you self-employed? How could your new relationship impact on your business partners without an agreement?
  • Perhaps you are buying a property jointly, do you want to purchase this “as joint owners” or have you considered being tenants-in-common, owning equal or unequal shares?
  • When was the last time you reviewed your life and personal insurances? This should be done whenever you have a major life change.
  • Is your will current? You should complete a new one whenever you have a major life change.
  • Do you have Enduring Powers of Attorney for care and welfare and/or property?

Once you have explored these items and sought professional advice, you should be assured that you are starting your new lives off on the right financial footing.

Disclaimer

Steven Barton (FSP 32663) and Susan Pascoe Barton (FSP 32382) are Certified Financial Planners and Authorised Financial Advisers.  Their initial disclosure statements are available free of charge by contacting them on (07) 3060080 or they can be downloaded from www.pascoebarton.co.nz. This column is general in nature and should not be regarded as personalised investment advice.