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What you need to know about your partner's money!

Thursday, 28 January 2010

A growing body of research shows that married couples are astonishingly clueless when it comes to many aspects of their financial life together. In a recent survey about one third of respondents admitted to lying to their partner about money and in another poll 4 out of 5 people polled revealed that they hide purchases from the one they love! Liam's here to explain what you should know about your partner's money!

Liam Croke: Money Expert

Liam has worked in the financial services industry for the past 21 years and seen by many as an expert in the field of personal finance. He is a qualified financial and mortgage advisor.

In the past he has held senior management positions with two well known financial institutions along with one of the "top 5" accountancy practices in Ireland.
Liam gives his advice and wisdom on a daily basis to those who are just starting out to high net worth individuals. He currently works for a financial services company based in Limerick.

He is frequently asked to contribute and comment in all areas relating to personal finance on both national and local radio stations. You will have heard him for example recently on RTE's "The Mooney Show" and on Newstalk's "The Right Hook."
Liam was invited to make a presentation to the Joint Oireachtas Committee on Social & Family Affairs on trends and levels of personal debt in Ireland. He made his presentation to the committee on the 24th June 2009.

Liam is author of 4 personal finance books:
. The best selling "The Mortgage Maze Explained" published by Currach Press in 2006.
.
The best selling book "Your Money Your Life - Managing your finances in today's Ireland" published in 2007.
.
"I'm Broke! A teenagers guide to Money" - Published by Crabtree and distributed in the UK & USA in 2009
.
"Stash or Splash" which is being released in Ireland and the UK in September of this year.

. Liam previously wrote a weekly personal finance column for The Sunday World entitled "Mr. Cash - How to Save it, Spend it, Earn it" and has also written articles for the Sunday Business Post, the Evening Echo, the Sunday Independent, the Irish Sun, Prudence Magazine to mention just a few.


What women really want!

If you guessed the answer to this question is "true love" then you don't know Jack or even Jane.

A dating website, true.com, recently asked some 2,000 of its users what couples should spend more time discussing. Women chose money more than any other topic, placing it well ahead of sex, marriage or even parenting. Men chose - no shocker here - SEX.

Maybe women are just better tuned into what makes a relationship last because according to one psychology professor "Hot sex isn't what keeps people together, but not being on the same page about finances can be fatal"

A growing body of research shows that married couples are astonishingly clueless when it comes to many aspects of their financial life together. In a recent survey about one third of respondents admitted to lying to their partner about money and get this, in another poll 4 out of 5 people polled revealed that they hide purchases from the one they love!

What the heck is going on? Maybe the blame or at least part of the problem is the way so many couples divide financial responsibilities. Maybe she does the investing and he pays the bills or vice versa. Maybe he arranges their life cover and she does the health insurance. As long as each is happy about what they are doing and content with whatever he or she is handling then fine. People these days are marrying later than they used to and come into the union with their own credit cards, bank accounts, investments and so on and these continue to remain separate.

Many couples say that the reason they don't tell their partner what they have spent or saved because it will spark criticism or a fight. It is understandable therefore that you might choose to keep a few details to yourself but you cannot come to smart decisions or even joint decisions if you don't know what assets and liabilities you're working with. In other words, two heads are better than one for solving financial problems.

The blinkers on approach can make a crisis much more difficult to handle. For example should your partner pass away, you will be left scrambling to find bank accounts, insurance policies and what if you inherit debt that you never knew about? And if you divorce, you could be at a real disadvantage in getting your fair share.

Fortunately the solution is quite simple. Mostly what you have top do is talk to each other. Here are some of the questions you need to ask each other:

What you need to ask your partner!

. What have you got? Have you money on deposit you have not told your partner? Have you debt your partner does not know about?
. How much money is coming in and going out each month? What is your total source of income?
. How much life assurance do you have? Where is the policy document? Have you made a will and if so where is it?

All of your financial material should sit on one or two file drawers at home, this way when you sit down together to discuss any kind of financial planning, everything you need to work with will be readily available.

See whether you can answer these questions about your partner's money then switch places and see how your partner does:

Can you answer these questions?

. How much money did your partner make last year including salary, bonuses and commission?
. What's the last big purchase (more than €100 your partner made and how much did it cost?
. How much does your partner owe, counting credit card balances, car loans and any other debt aside from your mortgage?
. What is the current value of your partner's retirement plan? (They probably don't even know this!)
. If your partner was to die, how much will you collect in life assurance, counting a possible death in service benefit payable by their employer and individual policies?

The prime earner dies and leaves everything to his partner - how is the process and entitlements different if they are married or not?

If they are not married and the person does not leave a will then the distribution of his/her assets will depend on his marital status or he he/she has kids.

For example if you die and you have no kids and you do not make a will then your estate will go to your parents who will share it in equal amounts. If there is only parent alive then they take all our your estate. If both parents are dead then surviving brothers and sisters take it all between them in equal shares etc.etc. have a look at the attached for a breakdown of who gets what when no will is made.

If a will is made and you leave everything to your partner but you are not married then you could have an tax issue on the amount you inherit! If the above you receive is greater than €20,740 then you will have to pay tax on the amount above this at 25% so if the inheritance is substantial then the tax payable could be as well! if you are married then you will not have to pay any inheritance tax whatsoever.

If you have a child but are not married then the child will inherit all of your estate with no inheritance tax due.


Can a partner (not married) collect on a life assurance policy?

Yes they can but they have to show a life assurance company that a relationship exists.

If you buy a house together for example then you are considered "tenants in common" i.e. where each persons share of the asset is separate and distinct from the other owners share and forms part of their estate on death and does not pass automatically to the other joint owner on death unless otherwise agreed in writing i.e. in a will.

If you take out a life policy on your partner and they are the life assured and you are the policy owner then make sure you pay the premiums otherwise if the policy goes to them because it is in your will then they will have to pay tax at 25% on the amount over the allowed threshold. If no will is made then the proceeds of the policy go into his/her estate.


What happens when an unmarried couple with children split? How are assets divided? What about if one half of couple dies and they have
children (unmarried)? "

If they die then their assets are simply left to their child or children to be divided equally amongst themselves

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