It’s that time of year. Happiness abounds as we celebrate the optimism and promise of nuptials—but what about the financial implications of ‘tying the knot’? If you and/or your fiancé come to the marriage with debt, it’s wise to understand the implications.
First, prior to marriage it’s important to know your partner’s attitude to money. Are they are saver? A spender? A debtor? If you haven’t had the conversation already, it’s advisable to ‘check in’ on your shared or differing values regarding finances. You want to know sooner than later if you have a similar vision and goalsregarding how you will spend and save your money. Stats confirm that money issues are a leading cause of marital strife and break-up.
It’s important to know how much debt your fiancé is bringing to the marriage. Firstly, as an indicator of their approach to money matters and also to understand the debt load they are servicing. Their current financial obligations will now impact your ‘family’ finances for day-to-day living—and, your future plans. Ask too if they are current with their obligations to Revenue Canada (CRA). You won’t be liable for any debt they have to CRA but again, it’s an indication of their approach to personal finances—and, has implication to your joint lifestyle if they have significant arrears to address. Keep in mind: financial irresponsibility canlead to a poor credit score, later affecting the probability –or ease – of buying a new home or other large joint purchase.
If you intend to register or re-register real property (home, vacation property) in joint names upon marriage, get advice from a lawyer first. Understand the implications—including the very real likelihood that each of you is then deemed to have equal, shared ownership. Consider: you may have brought more assets to the marriage and if your partner was later to go bankrupt, half of (now) joint assets could be lost.
Getting a supplemental credit card under your spouse’s existing card may seem to make sense and perhaps comes with a ‘romantic notion’ of your new status as a couple. Understand the risk: the moment you make your first purchase on that secondary card you are now jointly and severally liable for all charges on that card whether made by you or your spouse. If your spouse defaults on the credit card you are responsible for the entire debt.
Got questions? Our Trustees are available to discuss your pre or post marriage debt issues. Contact us for a confidential, no-obligation, complimentary consultation. Call us toll free from anywhere in Alberta 310 8888.