Financial issues, be they from disagreements over money, financial stress, differing priorities, or other financial problems, have been recognized as a common factor contributing to divorce. In our statistically invalid observations among clients of The Wealth Conservancy, it does seem as though clients who have co-mingled funds have fewer conflicts when they have financial agreements that are communicated and adhered to.
Since we specialize in working with individuals who have inherited wealth, more often than not we encounter situations where our clients’ partners’ financial resources are significantly less. Defining some boundaries between the two eliminates surprises. Perhaps “surprises” should be added to the list of underlying causes of discontent leading to divorce.
- You spent $12,000 on a bike?!
- You were married before and have three stepchildren?!
- Your trust prohibits distributions to me if something happens to you?!
- You still have $265,000 in student debt?!
The problems we encounter nearly always involve surprises that can be eliminated with communication and agreements. These agreements often incorporate spending limits. For example, you agree to check in with your partner before spending $10,000 (or some other amount that feels right to you). That type of arrangement works well when it’s reciprocal. What we often see is that the inheritor enacts the rules but doesn’t agree to the same communication agreement in reverse. This skews the power in the partnership/marriage, which disempowers the non-moneyed partner/spouse. Agreeing to each abide by the same communication agreements might lead to a more strife-free relationship.
Another solution we’ve seen work among couples is when the moneyed partner provides financial independence to the non-moneyed partner by transferring funds into their name. That way, the non-moneyed partner is not at the mercy of their partner and, if they choose, can surprise their moneyed partner with a gift, for example. Now that’s the type of surprise relationships can endure!
If you’re in a fiscally unequal relationship and could use some coaching on navigating the terrain, call 303.444.1919 or email us. One of our wealth coaches can help.