Couples Finance – Dealing With Assets

couples-finance-propertyMany couples, be they partners or husband and wife, take the decision to buy assets such as property and cars jointly. In relationships where there is one breadwinner, assets may still be placed in a spouse’s name to offer the person who doesn’t work a sense of financial security. What are the various options when it comes to assets and what approach should you be taking?

Mutual Purchases

If both partners work and are contributing to the repayments on an asset like a property or car, it makes sense that the asset should be in both partners’ names. The same principle can be applied to investments and policies, depending on how much each partner contributes to the investment.

Some couples opt to separate their finances by agreeing that one person will pay the bond on their home while the other will make sufficient contributions each month to a retirement fund and other types of investments to ensure a comfortable retirement. In this case, the couple should decide whether each partner’s contribution should be in his or her name, or whether all assets should be placed in both their names.

Assets and Community of Property

Couples who are married in community of property are essentially financial partners, with all assets and liabilities being shared between them. However, if the couple is married with an accrual clause in their ANC (Ante-Nuptial Contract) it may be wise to place different assets in each person’s name depending on how much each one contributes to the family’s investments and asset repayments. In the case of a divorce, couples who are married in accrual may discover that the partner who earned less or did not have sufficient assets in his or her name loses out financially.

Couples with One Breadwinner

In couples where one person earns most or all of the income, a decision may be reached to place some assets in the name of the partner who does not work, providing a sense of financial security. While this approach may be useful for couples married with accrual as above, it is important to remember that any income derived from the asset (like rent) or capital gains from the sale of the asset must be dealt with from a tax point of view.

However a couple chooses to allocate assets, communication and honesty are two keys to success. Once the couple agrees on how assets will be allocated, with both partners understanding the process fully, the issue of ‘who owns what’ is not likely to become an argument.

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