With wedding season in full swing, partners are looking toward their forever futures together. This Seattle Times article reminds us that prior to saying “I do” it may be wise for partners to have honest discussions around financial infidelity.
The article makes important points about financial deception its role in breaking up a rising number of relationships and marriages. A study for the National Endowment for Financial Education (NEFE) is referenced, which found that 2 out of 5 Americans who have combined finances admit to lying to their partner about money or hiding financial information. Rates of financial deception are reportedly on the rise, with the percentage of people admitting some degree of financial infidelity up from 33% two years ago to 42% this year. It occurs most commonly among young adults, with 61% of adults 18-34 admitting to it, and runs across genders, with 46% of men and 38% of women admitting to a financially deceptive act.
Financial infidelity can vary from minor to more significant deceptions. It often includes hiding something, such as a stash of cash, a purchase, a credit card, a financial statement, or even a bank account. It may also include mistruths around income earned or disclosure of debt.
The article notes that in this technology-laden era, deceptions are easier to conceal. It is important to be mindful of this, as financial infidelity is known to be quite destructive to relationships. A NEFE spokesman discussed more of what the organization has learned about financial infidelity, including its wider prevalence in relationships where finances are combined and only one partner takes responsibility of money management. The assumption here is that if both partners are involved, there is more likely to be mutual accountability.
Finances in general are one of the top stressors in relationships and marriages, the cause of many arguments, and a top contributor to divorce. When mistrust around finances comes into play, it takes it to a whole new level. NEFE suggests each couple needs to determine a money-management strategy and budgeting system that works for them. Couples may combine or not combine finances to the degree that fits their personal preference and individual situation. No matter where you stand, the recommendation is to start your relationship with open communication and a common, mutual understanding!
If you are approaching marriage and having these tough conversations, you may also be considering whether you are going to execute a prenuptial agreement.
*Why get a prenuptial agreement?
There is a fair amount of social stigma attached to prenuptial agreements: Aren't you expecting your marriage to last forever? Why are you preparing for divorce? Does a prenup doom your marriage from the start? When saying “I do”, most all couples hope for “happily ever after”. The truth is, however, more than half of American marriages end in divorce, despite everyone's best intentions.
As much as a marriage is a public declaration of love and commitment, it is a financial partnership, endorsed by the government and involving certain rights and responsibilities. Prenuptial agreements are becoming increasingly popular. This is not because people are assuming their marriage will end in divorce, but because they are choosing to be prepared for all outcomes and protecting themselves and their separate property.
Making the decision to end a marriage is generally an emotional and painful process, unique to each individual couple. For couples who determine it is in their best interest to divorce, having a prenuptial agreement in place eases the process somewhat, with decisions about some of the important logistics involved in the separation process having already been made.
Please see our prior blog post for more information about pre- and postnuptial agreements, definitions, and the importance of experienced legal counsel.
*Why enter into a cohabitation agreement?
If you not married but are considering moving in with an intimate partner or if you currently live with a partner, you should familiarize yourself with Washington State law on committed intimate relationships (see our prior blog posting). A common option and the best way to protect yourselves is to enter into a cohabitation agreement either at the onset of moving in or even after you already have. Please review the following essential points about entering into a cohabitation agreement:
- This allows you to make sure that you and your partner dictate the terms of what will happen if your relationship and cohabitation are to end, rather than leaving it in the hands of a court.
- You may do this either at the onset of moving in or even after you already have.
- You can set forth how property will be divided and protect yourself from allowing a partner to gain a share of your property in the event of a break-up.
- Cohabitation agreements protect both parties and serve as insurance in the event that are questions or disagreements at the end of a relationship, when emotions often run high.
Our family law attorneys are well-versed in the sensitive nature of this topic area. We are prepared to help you navigate the process, offer sound legal advice and counsel, and draft your contract as appropriate. We are experienced in executing very complex and also more simple pre- and postnuptial agreements, as well as cohabitation agreements, depending on your unique situation. We will advocate for you and help protect your assets. Please contact us for a consultation.