Research into the spending habits of young, newly-married Australians has turned up some interesting findings.
Many are not thinking long term when it comes to financial planning. This includes how they want their property distributed after their death through estate planning and by writing a will.
While many couples are deciding to combine their income, few are thinking about the consequences for their partners if they divorce or pass away unexpectedly. Many couples are not concerned about planning for the end of their relationship and are instead more focussed on other financial matters, such as paying off the cost of their wedding.
According to the most recent Money & Marriage Survey conducted for Real Insurance, many young Australian couples are choosing to ignore the long term impact their special day might have on their future. They are spending large on the wedding and are not concerned with proper financial planning before or in the first few years of marriage.
In fact, couple were spending on average $65,482 on the wedding day according to the survey. Couples had no immediate financial plans to begin to reduce the debt with only 40 per cent able to pay for the wedding upfront.
This raises several important issues for family law and estate planning. Over the course of the marriage, how would finances be affected if the couple ended up divorcing or one partner unexpectedly died?
The research found about 80 per cent of Australian couples do not have an up-to-date will in place to manage the distribution of their property. While previous research by three Queensland universities found Australia to be one of the most will conscious countries in the world, young people lagged behind when it comes to planning for the distribution of their estate.
Many people are unaware that a will is nullified when someone marries, making it all the more essential that couples keep them up to date.
Increasingly couples were choosing to combine their finances but often without necessarily taking precaution such as having a binding financial agreement.
The survey found 55 per cent were merging incomes after marriage completely, while 37 per cent said they would partially combine their finances. Only 8 per cent responded that they would maintain their own.
There was a noticeable difference in the age of a couple and the likelihood they would combine their finances versus keeping them separate.
More than a quarter of respondents (27 per cent) over the age of 50 wanted to manage their own finances, making older couples more likely to want to keep them separate from their partner. While 68 per cent of 18-24 year olds are looking to open up joint accounts with their significant other.
Combining finances can lead to more complicated divorce settlements if no planning goes into writing a prenuptial agreement. The survey suggested love was blinding many Australians to the need to think long term when it came to merging two lives together financially.
For advice about estate planning or how to protect your finances in a financial agreement, contact Craddock Murray Neumann. There have lawyers who specialise in both estates and family law and who can advise you on managing your finances long term.