Danske Bank: Empowering Women Plan Their Financial Life When In Relationship

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Planning a life together? Take these legal issues into account to secure your financial peace of mind.

Financial awareness between partners or spouses and open money talk are important contributors to a financial peace of mind. In addition to discussion and planning, legislation can have a surprisingly large impact on couples’ finances at the various stages of their relationship and life.

Read about the legal issues you should prepare for when planning your life together.

Life surprises – with love and happiness, but also with illness, divorces and death. Preparing for the future is something you should do throughout your life, especially if you share your finances with a partner.

According to the results of Danske Bank’s Money & Love survey, more than half of people with joint savings and investments have no agreement on the fate of their assets in the event of a divorce and only 12% regularly discuss estate planning with their spouse.

Assets and financial commitments form quite a tangle over the course of a lifetime. In addition to your own income, debts and assets, the situation is influenced by your direct heirs and previous marriages or cohabitation, divisions of assets, inheritance and estate distributions.

Moving to live together, cohabitation, marriage and children all contribute to the type of law applied in situations such as divorce or the death of a spouse.

Few people realise how important a financial agreement marriage is. Once married, the spouses acquire a matrimonial right to each other’s matrimonial property, which at the end of marriage means practically everything they own. This can only be exempted from with a prenuptial agreement. When you are young and in love you do not think about things like possible future inheritance, especially if neither of you has much wealth at the time of marriage,” says Erkki Huttunen, a lawyer at Danske Bank’s Private Banking.

Huttunen points out that even fewer people understand that living together does not necessarily mean cohabitation and that the law also protects cohabiting partners in the event of divorce. The Act on the Dissolution of the Household of Cohabiting Partners will apply if they have lived together for at least five years or if they have a child in joint custody.

“The Act contains provisions on the separation of assets and any compensation to which a partner may be entitled in order to prevent the other partner from gaining an unfair advantage at the expense of the other.”

By agreeing on matters and having the necessary documents in order will produce a desired outcome. 

Instead of the traditional path, there are many ways of living a life together and many forms of family. Different forms of family and stages of the relationship are governed by different legislation. It is always worth planning and agreeing how joint assets will be shared regardless of age, family size or length of the relationship.

“The decisions of each family and couple depend on the case and should be agreed upon together exactly as they feel comfortable. How agreements are made depends a lot on the common will – each couple and family can largely decide for themselves by will to whom they want to assign their property after their death,” says Huttunen.

Variables in life

When renovating a shared home, getting married or viewing ultrasound images, you may not have the desire or courage to think that life may go differently than you thought. But for a financial peace of mind, it is also a good idea to have plans for life’s sorrows.

Unexpected periods of unemployment, illness, divorce or the death of a spouse are all tragedies that also affect your finances. It is a good idea to prepare for different situations by discussing, planning and agreeing with your partner or spouse.

Huttunen points out that without prior agreement and official documents, estate distribution and divorce situations proceed on the basis of mere legal presumptions.

“I am concerned about young cohabiting people in particular. They may have gained shared assets during the relationship but have not made any agreements. In the event of a tragedy, the closest heir is suddenly someone else than the cohabiting partner and in the middle of a huge crisis, there are problems in assets distribution and financial survival.”

By going through at least a prenuptial or a post-cohabitation agreement, a continuing power of attorney and both wills together and with a professional, you are already well prepared for future options and financial decisions.

Tips how to plan financial life

Do the following:

• Agree on matters in writing regardless of the form of relationship. At the very least, you should review a prenuptial or post-cohabitation agreement, the continuing power of attorney and wills together.
• Know your rights and obligations. It is worth knowing at which point legal issues become
  topical.
• Make sure that your ownerships and financial contributions correspond to each other. Make sure that you have the right of ownership of the things you have spent money on.

Learn more about Danske Bank and their financial services.