For richer, for poorer

Marriages nowadays aren't always for life, but your debts can be. Emma Simon reports

For richer, for poorer, for better, for worse: it may sound romantic but few couples discuss the financial implications of married life before walking up the aisle.

Money makes few of us go misty-eyed and debt is a real passion-killer. But if you don't discuss these issues in advance you may find you have not only gained a partner for life, but also a host of unwanted bills, overdrafts and credit card debts.

It is not only newly-weds who need to sit down and have a frank discussion about the financial facts of life. Anyone thinking of moving in with a partner should also consider how his or her pocket would be affected if the other falls into debt.

And don't assume that this will be nothing more than an unpleasant credit card bill. If debts spiral seriously out of control you could lose your savings, your business, even your own home.

But don't cancel the wedding cake just yet. There are some simple steps you can take to protect your finances from even the most proliferate, debt-ridden and financially inept spouse.

'There are a number of precautions that couples can take to help protect their finances,' says Mike Warbruton, a tax partner with Grant Thornton. 'These are particularly important if one partner is self-employed, runs their own business or already has a debt problem, because the chances of running into more credit problems is that much higher.'

  • Over the page: step one

    Step One
    Protect your own assets

    Any bank account, savings, property or equity that is in your name is legally yours. And even if your spouse runs into serious financial difficulties, the creditors can't pursue you for this money. This applies as much to debt run up from before your marriage as any during it.

    There is one exception though. If your partner is about to go bankrupt he will not be able to 'hide' assets from his creditors, simply by putting them in a spouse's name.

    If a bank account was opened by you, your salary is paid in every month, and it has been in your name for the last five years then the money in it is safe. If, however, it was a joint bank account that was simply transferred into your name a couple of months before your partner files for bankruptcy, then expect legal proceeding, as creditors try to grab assets that are legally theirs.

    The same applies to other assets - be it property, equity, possession or savings. If it is just in your name to avoid paying pending debts, the ownership can be legally challenged. If you can prove it is financed purely by your own means, or it was gifted to you before your partner hit financial dire straits, then creditors have no legal right to grab these assets.

  • Over the page: step two

    Step Two
    Keep an eye on joint assets

    This is where couples usually run into difficulties. Most couples have joint bank accounts, joint savings, shared credit cards and a family home. If one partner gets into financial difficulties then these assets are under threat.

    In the most simple cases, this could leave a husband or wife to repay overdrafts or credit card bills even though they haven't been the ones responsible for the shopping spree. If one partner is unable to repay his or her half, the bank or credit card provider has every right to chase the other named party for any outstanding debt.

    Financial advisers warn that if a marriage is under strain, one of the first things couples should do is to close joint accounts and cards. All too often, they say, one spouse is left high and dry with nothing more than a stream of angry letters from the bank. If you think your partner is going to leave you, at least make sure that he or she can't rack up a huge overdraft in your name first.

    Again if one spouse has run into severe financial problems, such as filing for bankruptcy, creditors can legally go after these joint assets.

    But they are only entitled to that person's share of the assets. So, for example, if you have a shared savings account with £5,000 on deposit, creditors could apply to receive half of this. The same applies to property. If the home is in both partners' names, then creditors are only entitled to 50 per cent of the property's value, even if the outstanding debt is far greater than this amount. Of course, this often means that couples are still forced to sell the family home to pay this share of the debt.

    Many businessmen do put property solely in their wife's name, in order to protect the family home if the business fails. But if you are considering doing this, remember - the property then belongs to just one partner. This could have serious repercussions if you later split up.

    Couples might want to give some thought to the question of which is most secure - the marriage or the business?