Some of the most important conversations a couple must have involve property. Unfortunately, these conversations can also be among the most difficult. It’s critical to build a relationship of trust in a marriage while making sure both spouses share common expectations about marital and separate property.
If you’ve not yet tied the knot, set mutual and individual financial goals, both short-term and long-term. You’ll also need to discuss your strategies for achieving those goals and set a budget for your household.
You can memorialize these discussions and make them binding on one another using a prenuptial agreement, also called an “antenuptial agreement” or just a “prenup.” If you’re already married, some states allow you to execute a postnuptial agreement, which can often meet many of the same goals. Both types of agreements require full financial disclosure, just the sort of thing that can help build trust between spouses or spouses-to-be. To make sure your agreement is binding, see a licensed family lawyer in your state.
It’s also important that you follow sound property management practices to meet your joint and individual goals. Here are a few dos and don’ts to get you started down the right track:
Property Management Dos:
1. Do learn about property law in your state
State laws vary considerably, so it’s important that you know how the law treats property in yours. For example, in many states, separate property includes property that you owned before your marriage, property gifted to you during the marriage, and property you acquired after the date of your separation. But these rules do not apply in every state, and how you handle the property can change whether it is considered marital or separate.
2. Do make sure you have a paper trail for property you wish to keep separate
For example, if you bought a car before marriage that you want to keep as your very own, keep the title separate and use only your separate funds to make repairs on the car. Keep receipts and accurate books.
3. Do keep separate property completely separate
That means going the extra mile to keep separate money in a separate bank account and not titling a separate asset in both of your names.
Property Management Don’ts:
1. Don’t use separate property to make payments on marital property
For example, if the two of you own a house together, don’t use money from your separate account to make mortgage payment or to buy paint or a new A/C unit.
2. Don’t mix—known legally as “comingle”—separate and marital property
Don’t mix separate and marital property unless you want all of the property to be owned by both of you. For example, if you inherit money during your marriage, don’t put that money into a joint bank account. If you do, it is likely that your spouse will have an equal right to your inheritance. The same goes for any personal injury settlement you obtain during your marriage.
3. Don’t title your property in any different way
Don’t title property in any way other than how you want to actually own the property. In some states, the way property is titled is dispositive of ownership. In others, it is not; however, the title will certainly serve as evidence of whether the two of you intended the asset to be marital or separate. This caveat applies to all types of property, such as houses, cars, and bank accounts.
Starting a new life together is exciting and sometimes a little bit scary. You can take the edge off and begin to build trust in one another by taking on those difficult financial conversations. Coming from different backgrounds, people often have different expectations when it comes to important subjects like property. And when you’re ready to commit your agreement to writing, consult with an experienced family lawyer in your state.