Are you in the dark about your partner’s finances? - Debt - Money Tips - Moneyfacts.co.uk

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Are you in the dark about your partner’s finances?

Are you in the dark about your partner’s finances?

Category: Debt

Updated: 02/02/2016
First Published: 03/01/2012

How much do you know about your partner's finances? Everything? What you need to? Nothing?

Whilst money is probably the greatest taboo for a lot of couples, it's vital to discuss and know about each other's finances. In the event of the unthinkable you could end up having to take over your partner's financial matters – even their business. At the very least, you'll feel protected by knowing the state of your partner's assets and liabilities.

Are you liable for your partner's debts?

Any joint debts you have, such as a mortgage, loan, credit card – even a joint bank account with an overdraft – will be treated by the lender as "jointly and severally liable".

That means that if one of you can't pay – either because of death, accident, sickness or even abandonment – the other party, i.e. you, is responsible for the whole debt.

On the other hand, it can sometimes be the case that borrowing is undertaken in a relationship by the more creditworthy partner, for the benefit of the other partner. Because you are a team you don't see it as a problem – that is until things go wrong…

Debts that are held in just your partner's name would not be your responsibility should your partner not be able to repay. Even if you're a named cardholder for your partner's credit card, it is their debt, not yours. Conversely, if you take on a debt in your sole name for your partner and they then leave, you are lumbered with the borrowing.

Don't be afraid to say no if you're not comfortable taking on joint borrowing with your partner. For fixed debts, such as loans and mortgages, consider life and income protection insurances to protect each other.

How much do you know about your partner's savings and investments?

What's mine is yours is a great sentiment, but it's not always the way some of us feel – particularly when it comes to our hard-earned savings and investments.

However, as with debt you should be open about what you have stashed away. This wealth could affect your family's entitlement to certain state benefits, and it could even be split between you to mitigate certain tax liabilities.

Your partner's pension is probably the most important thing to be aware of. And if you've been unable to pay in as much as you'd like into your pension (perhaps because you've taken time out of your career to bring up the children, for instance), this becomes even more important. Consider speaking to an independent financial adviser about how you can both prepare for retirement.

How well protected is your partner?

It's morbid, but unfortunately a very reasonable question to ask: how much life insurance does your partner have?

If they were to die, or suffer from a critical illness or injury, what would be the financial impact to your family? Life and critical illness cover can provide peace of mind and protect your family if the worst was to happen.

Similarly, is your partner's income covered if they are made redundant or suffer long-term illness or injury? Income protection or payment protection insurances can provide meaningful cover in this event, and can prevent an unfortunate situation becoming a financial catastrophe.

How well do you know your partner financially?

1. Does your partner have a pension?
Don't know
yes
No
2. Do you know the current balance of the pension?

Yes
No

3. Do you know how many credit cards your partner has and the balances on them?

Yes
No

4. Do you know about any other debts your partner has, including catalogue accounts, overdrafts and loans?

Yes
No

5. Do you know how much your partner has in savings?

Yes
No

6. Does your partner have life insurance?

Don't know
Yes
No

7. Is your partner's life insurance adequate to protect you?

Don't know
Yes
No

8. Do you know how much joint debt you have with your partner?

Yes
No

9. Do the assets that you and your partner hold exceed the Inheritance Tax threshold?

Don't know
Yes
No

10. Do you know where your partner keeps their important financial paperwork?

Yes
No

11. Does your partner have a Will?

Don't know
Yes
No

If you answered mainly with "Yes"…

Great! You know a lot about your partner's finances. This means that you are well-placed to act if your partner became ill or incapacitated, or even if they leave. Try to find out the answers to any questions you answered "No" or "Don't know" to and take action to protect yourself where possible. Seek independent financial advice if you are in any way uncertain.

If you answered mainly with "No" or "Don't know"…

You need to find out more about your partner's finances. Lack of knowledge does not prevent a lender asking you for payment on a joint debt. Knowing your partner's finances intimately can help you plan together as a unit and work as a team. Speak to a financial adviser for more information.

What next?

Speak to an investment adviser
Compare life insurance
Compare income protection insurance
Dealing with debt (includes useful links)

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

 
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