How to financially protect yourselves in a marriage

Are you financially protected in your marriage? Victor Garrett takes a look at the risks of living together and how to protect yourself.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

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Are you financially protected in your marriage? Sarah Coles, personal finance analyst at Hargreaves Lansdown, highlights the financial risks of living together and ways to protect yourself. Let’s take a look at her top five suggestions.

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1. Write a will

It’s a given that we prefer not to think about death. However, if you or your spouse dies without a will, the remaining partner might get nothing. You could also lose your home if it’s in the name of the deceased. Without a will, it is common for everything in their name to pass to their children, and if they didn’t have any, to the deceased’s parents.

Writing a will guarantees that your assets are left exactly where you want them and that loved ones aren’t left in a challenging situation in the event of a death.

2. Think carefully about asset ownership in your marriage

If one of you moves into the other’s house and the house remains in just one name, it might be wise to consider a ‘tenants in common’ agreement. It allows your financial contributions to be reflected in the proportion of ownership. More so, in case of death, each person has the right to leave their share to a beneficiary.

Additionally, if you’re saving or taking on debt as a married couple, it might be wise to have both your names on the paperwork, especially if it’s benefiting you both.

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3. Sign a prenuptial or cohabitation agreement

When getting married, no one plans to divorce their spouse. But sometimes, divorces and separations are inevitable.

If you split up, and either you or your spouse have sacrificed a career for caring responsibilities, this person won’t have a right to spousal maintenance.

Sarah Coles explains: “On average, women’s pay falls 7% for each child they have – so without maintenance to make up the difference, this could leave them thousands of pounds worse off each year.”

Signing a prenuptial or cohabitation agreement irons out what will happen in the event of a divorce or split. If you didn’t sign a prenuptial agreement when getting married, a postnuptial agreement can work. It’s practically the same document as a prenuptial agreement, but it’s signed after marriage.

A cohabitation agreement is ideal for couples that are living together but aren’t married.

4. Secure your child’s future

Since the future is uncertain, saving and investing in the name of your child is wise. If you’re not sure where to start, you could try a Junior ISA.

There are two types of Junior ISA: a cash Junior ISA and a stocks and shares Junior ISA. Your child can have one or both.

A Junior ISA account allows you to save money for your child tax free. No tax is paid when withdrawing, on interest, on capital growth or on dividends you receive. However, Junior ISA accounts won’t allow you to withdraw the money until your child is 18 years old.

Take a look at our top-rated providers of stocks and shares ISAs and cash ISAs to compare them to get a match that’s good for you.

5. Take out life insurance

Life insurance can benefit your children. It can help pay for childcare and, eventually, college. Additionally, if you and your spouse rely on each other’s income to sustain your lifestyle, life insurance can help keep either of you financially afloat if the other dies.

However, there are two particular circumstances that are important to think about. What happens if your marriage ends? It might be important for the resident parent to have cover. Additionally, if one parent is paying child support, it might be prudent to have cover to replace it in the event of death.

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