May 13, 2008 | Ginger | Comments Comments

Financial Infidelity Revisited: 7 Tough Questions

Given the divorce rate of 50%, I often wonder what women are doing when it comes to their money. Women are commanding a higher earning power today than ever in US history. What does this mean for the modern day marriage? Are prenups acceptable? Or do they set the marriage on a path to divorce court? What about equalizing roles in the home when a woman earns 4-5 times more than her male partner?

At our meetup on Friday, (albeit a small turnout due to the weather) we had thought provoking conversation around the issue of financial infidelity. We are reading and reviewing the book, Financial Infidelity: Seven Steps to Conquering the #1 Relationship Wrecker as we await more copies to our group by the publisher. So as we thumbed through the book, the following issues came up:

If you own property before the marriage, the is that fair game in the divorce? What if you both lived in the property before getting married?
How do you deposit cash flow from rental property? In a joint account? Individual account? Which one and why?
If you get married and one partner already owns real estate, then do you add their name to all properties in your portfolio?
If you marry someone with children from a previous relationship and become a blended family, then are you the non-biological parent responsible for that child’s education? What if they do not live with you and your spouse?
Do you ask your boyfriend to see his credit report before getting serious? Is that something appropriate to ask before getting married?
If your mate has tax issues with Uncle Sam, do you file joint or separate?
You receive an inheritance after you get married, do you deposit this in a joint account? Separate account? Do you tell your mate at all?

I don’t have an answer to these questions just yet as I struggle with my heart, what’s right and what would protect me in the event of a divorce. What would you do? These are tough questions and I’ll answer once I’ve gotten my thoughts together. I am relieved that we were single, unattached with no baggage or major assets when we got married. We both owned property prior to the marriage but they weren’t an issue as we kept those dealings separate. These questions almost force you to get on the defense at a time when you’re supposed to be thinking as one.

I’ve gotta ask: how would you answer the above-mentioned questions?

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About the Author: Girls Just Wanna Have Funds is for the woman that wants to take charge of her personal finances. We value budgeting, investing, frugality and remain mindful of our spending habits. Move over and make way for women who are in control of their financial destinies and not afraid to say it. We're armed with a positive net worth and not afraid to flaunt it while breaking financial ceilings one stiletto at a time!

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obsolete29 | May 13, 2008 | Reply

*disclaimer- I’m a dude.

I believe that when two people get married, that they stop being two individuals and for all intents and purposes they become one entity. All assets become “ours”.

I don’t know if you actually have to see the credit report but having that discussion isn’t out of bounds.

One person’s tax issues become *our* tax issues. It isn’t important that one or the other has credit or tax issues. It’s only important to be able to agree on how to address the issue.

An inheritance becomes *our* inheritance. You should never keep secrets like this from your spouse.

It seems to me that if a couple is having serious considerations about these issues that maybe they’re not quite ready to get married yet because it doesn’t seem as if they’re ready to buy into the whole marriage deal if that makes sense.
ToilingAnt (2 comments.) | May 13, 2008 | Reply

I pretty much agree with obsolete29. DEFINITELY discuss money. If you’re not ready to combine your lives, including the financial aspects, I’d suggest reexamining your motives and readiness for marriage.

As far as blended families go: my husband has a daughter who lives primarily with her mother. I am not expected to support her in major ways (school, etc.). My income is not factored in when child support is calculated. Apart from that, though, I do contribute to her well-being (I sometimes buy her gifts, clothes, etc., contribute to the rent for a 2-br apt rather than just a 1-br, etc.) and simply consider it part of my relationship-building efforts.

My philosophy is pretty simple, I think- as long as our needs are being met and excess funds aren’t being squandered (charged to the max, gambled away, etc.), I try to be pretty easygoing about money.

I wonder if I could fit another “etc.” in there somewhere.
ToilingAnt’s last blog post..Does it count as a workplace injury because I office at home?
Ginger | May 13, 2008 | Reply

Testing
Small Budget, Big Style Chick (8 comments.) | May 13, 2008 | Reply

This is a very thought provoking post. Even though I am not yet married, I tend to think along the lines of the two previous comments. I will carefully think of the items the book you are reading mention for future reference. I also found Suze Orman’s book Women & Money helpful in discussing how women (single and married) view money in general.
savvy (9 comments.) | May 13, 2008 | Reply

My responses to the questions:

1 - I think it depends. It is investment property or a personal residence? Was it purchased separately or jointly? Legally, something separately owned prior to marriage does not become ‘community property’.

2 - Once again, it depends. Was it owned by one individual previous to the marriage or purchased jointly? Also, for audit-worthy financials, investment income/expenses should flow through a separate account expressly for that purpose rather than being commingled with personal (be it individual or joint) funds.

3 - I wouldn’t because it really wouldn’t matter to me. However, I would explicitly state in my will that the property would go to my spouse in the event of my death.’

4 - The non-bio parent isn’t financially responsible but since s/he is now married to the bio parent, the education would still come from “family” funds.

5 - I didn’t ask to see a credit report before getting serious, however I already had indicators that he was fiscally prudent (meaning had no debt other than a mortgage, was not a spendthrift, had savings, etc.). I would advocate finding out that information before getting engaged or married.

6 - I wouldn’t enter into marriage with my prospective mate having tax issues. I would want that to be resolved before marriage. Also, depending on the extent and circumstances of the issues, it might be a deal breaker in terms of getting married.

7 - I would definitely tell my husband. The amount would determine whether it went into my individual account or the joint account. I.e. if it was a huge amount ($100K or more), it would go into the joint account and directly back out to pay down the mortgage. If it was a smaller amount, I would probably just put in into my individual account.

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Fabulously Broke (20 comments.) | May 13, 2008 | Reply

Linking this in my next round of Link Love

If you own property before the marriage, the is that fair game in the divorce? What if you both lived in the property before getting married?

No. It’s not fair game if it’s been in the other person’s name (solely) and the other paid rent or lived rent free.

How do you deposit cash flow from rental property? In a joint account? Individual account? Which one and why?

If everything in the contract was 50/50, it’d be into 50/50 for each individual account in my opinion just so it doesn’t get muddied in the joint account.

If you get married and one partner already owns real estate, then do you add their name to all properties in your portfolio?

No. It’s not fair.. in my opinion unless I’m willing to give him 50% of the value of the properties.

If you marry someone with children from a previous relationship and become a blended family, then are you the non-biological parent responsible for that child’s education? What if they do not live with you and your spouse?

If they become “my” children, I’d say I’d have a responsibility to raise them but unless I could have a say in their education and they really treated me like their mother, I wouldn’t pay anything.

If they don’t live with me, it doesn’t matter - if they’re “my” kids, I’ll treat them as such.

Do you ask your boyfriend to see his credit report before getting serious? Is that something appropriate to ask before getting married?

Not so much a credit report, but I probe a LOT about spending habits, frugality, how he budgets etc…

If your mate has tax issues with Uncle Sam, do you file joint or separate?

Depends on what kind of issues they are. I think I’d file separately until he got his issues sorted out.

You receive an inheritance after you get married, do you deposit this in a joint account? Separate account? Do you tell your mate at all?

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Sara | May 13, 2008 | Reply

As a woman who earned well more than her ex-husband and still earns more than her fiance, I would be happy to share my experiences.

First, check the laws in your state. When I divorced, I lived in Louisiana, which has common property laws. Didn’t matter that both of our names were on the mortgage or not…it was common property from the day of marriage or declaration of common law marriage. So please, know your state’s laws. We ended up selling the house and splitting the proceeds.

Not sure about the rental property - I don’t have any. But if I did have some sort of side business held only in my name, it would probably be my money. I might choose to deposit it in a joint account, but it would be my decision to.

I own the house my fiance and I live in. I will not be adding him to the deed. He did not contribute to the downpayment at all. He does pay me rent. However, this is something we have talked about and he agrees with me on this.

I have no experience with the children issue, but I agree with Fabulously Broke.

I did not ask for a credit report from my fiance while we were dating, but we did share financial information with each other freely during the relationship. Similarly, I knew the position of my ex husband as we were engaged.

I have no idea on the tax issue. It really would depend on what that means. If he literally has issues with being taxed, like a friend of mine, it would get very interesting quickly!

I think an inheritance is also like a side business…I choose what to do with it, but I will listen to my spouse’s input.

I had no issues with the way money worked in my previous marriage, and we have agreed to the same system for my upcoming one - we will have separate accounts, but have a joint account that we both deposit into for common bills. He will continue to pay off his car and his student loans separately, just as I pay for my dancing lessons out of my money and eventually a new car.
Ginger | May 13, 2008 | Reply

Great responses, hmmm in the interest of my marriage and livelihood Im gonna plead the fifth as some of these strike home for me. Its about doing the right thing but Im also using wisdom in my thinking.

* If you own property before the marriage, the is that fair game in the divorce? What if you both lived in the property before getting married?

No it is not fair game.

* How do you deposit cash flow from rental property? In a joint account? Individual account? Which one and why?

Individual account if it is in my name, joint if both

* If you get married and one partner already owns real estate, then do you add their name to all properties in your portfolio?
Nope, not unless they made a downpayment

* If you marry someone with children from a previous relationship and become a blended family, then are you the non-biological parent responsible for that child’s education? What if they do not live with you and your spouse?

Nope, he would have to work that out with the child’s mother as long as she were living and maintaining a job.

* Do you ask your boyfriend to see his credit report before getting serious? Is that something appropriate to ask before getting married?

You’re damn right-I have no shame in this regard. Screw not wanting to seem intrusive, heck, we will be married and I need to know just HOW responsible you’ve been with credit which also speaks to integrity and character. So he would have to PONY UP on the credit report, which hubby did before we got married.

* If your mate has tax issues with Uncle Sam, do you file joint or separate?
Separate, no sense in both of us screwing up

* You receive an inheritance after you get married, do you deposit this in a joint account? Separate account? Do you tell your mate at all?
This is personal because I did/am receiving an inheritance. This is mine all day till the cows come home and I will be making sure that I invest this money so that my grandchildren will see it as well.
Claire | May 18, 2008 | Reply

Definitely consult the law of your state, whether it’s the state that you live in or the state that the real property [land] is in.

Texas is a community property state. In Texas, income and rents from separate property (property owned before marriage, gifts, inheritances) are community property. The community estate is what is divided during divorce. So don’t be fooled by the idea that putting the rent money into a separate account will make it separate property in a community property state.
Linda Davies | Apr 21, 2009 | Reply

I am living common law, have been for 3 years, we own a house jointly, we contributed equally, and have no mortgage.He earns 65K -115K (net income) and I am on commission, so its all over the place, but on average 25K -45K Net. He deposits $1200. (Canadian )per pay and I deposit 1400 monthly. I sometimes don't make enough and have to go into my savings, he on the other hand puts all his excess into his own account. I am not comfortable with this, he says 2200 is all he's putting into the house, he gets 3 extra pays & alot of overtime on top of his salary. Thers seems to ne something wrong with this pic? My savings that I had before we lived together is shrinking and his is growing && He maintains that any expenses for the house should be 50/50
Gingerlatte (33 comments.) | Apr 21, 2009 | Reply

Oh wow, you know I never quite looked at this possibly being a problem. I guess I've always looked at it as even if you're going 50/50 the other person would cover expenses when needed. This is why I advocate an all or nothing approach to money. One account, set ground rules and be done with it.

I imagine that if you all were short on the mortgage he would help? Or would he let it go into foreclosure?

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