Monday, 20 May 2019
Money can be a deal breaker in many marriages.
In fact, over the years, numerous surveys have shown financial issues are one of the top causes of marital conflict and even divorce.
It can be easy to assume this is primarily due to a lack of financial resources, the stress that accompanies money worries and conflicts about how to save or spend limited funds.
But what if there is plenty of money? When couples enter into relationships with ample wealth and assets, does that mean there will be no financial conflicts?
Probably not. While most people might think that having money solves all problems, the truth is it can create many as well. Which is why it's just as important for couples who both bring wealth to a relationship to learn how to communicate and manage money in an honest, open and mutually acceptable way.
Here are some suggestions to help high net worth individuals discuss and manage money with the goal of building a strong, lasting marriage.
Prenuptial agreements have gotten a bad rap, mostly because people associate them with divorce. But “prenups" can be an excellent tool for building a solid financial foundation for a marriage.
In most cases, both parties disclose their assets during prenuptial negotiations, which gets all financial information out in the open. Then, couples can decide how assets will be combined — or not — at the very beginning of the marriage. These negotiations are an excellent opportunity to establish ground rules and gain a clear understanding of how you and your spouse will manage and share the wealth acquired before and during your marriage.
Money is a sensitive issue for many people — even bringing it up can cause discomfort. That's because discussions about money tend to be negative. When discussing money, it's smart to avoid accusations, questions and innuendos. Instead, focusing on shared goals and how to best utilize your resources can lead to a much more productive and rewarding conversation.
As benign as these words might seem, they can be quite dangerous. There's a good chance wealthy couples will not combine all assets when they marry. However, what is shared is what matters — not what each person has individually. Creating an atmosphere of equality and oneness is an excellent goal.
One person shouldn't have the primary relationship with financial professionals such as accountants, attorneys, bankers and wealth managers. It's smart to create a system where both partners have equal access to information and documents, and input on financial decisions. Even when there are separate checking or other accounts, giving the other partner access to account information is essential.
This is not the financial plan created with a wealth manager or advisor. This is an informal, thoughtful, ongoing discussion about how both parties would like to see assets utilized, what kind of future they envision and what kind of legacy they want to leave behind. This type of intimate financial conversation can help couples understand each other's approach to money and build a strong financial partnership.
Even when financial resources are plentiful, unilateral spending decisions can be problematic. Once again, it's a matter of transparency and trust. Consider having a spending threshold — whether it be $1,000 or $10,000 — and any expenditure exceeding that warrants a conversation. Not approval or disapproval. But a conversation.
Raising children in wealthy homes can pose a whole laundry list of questions and challenges. Deciding together how children will be raised — things like whether they will get allowances, when they will learn about the family's financial position, and how to pass along personal and financial values — can go a long way toward minimizing future money-related conflicts.
As with anything in a marriage, when it comes to building a healthy financial relationship, it's all about trust. But trust isn't given — and it can't be purchased. Trust is built over time through open communications, transparency, honesty and respect.
The content provided is for informational purposes only. Neither BBVA USA, nor any of its affiliates, is providing legal, tax, or investment advice. You should consult your legal, tax, or financial advisor about your personal situation.
Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA USA or any of its affiliates.Links to third party sites are provided for your convenience and do not constitute an endorsement. BBVA USA does not provide, is not responsible for, and does not guarantee the products, services or overall content available at third party sites. These sites may not have the same privacy, security or accessibility standards.
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