When you think about surprising your partner with something special, you probably think of their favourite blooms, chocolate or a dinner date – not sitting them down for a discussion about your bank balance.
Things like how to manage pre-marriage debts, how to separate your finances, and how to handle your shared finances should you go separate ways are hard but important questions every committed couple should answer together. Yet many couples – both married and unmarried – avoid talking to each other about their financial future.
Couples who really care about each other know that open, regular discussions about finances are important for a healthy relationship. And global surveys that rank money as a top cause of divorce only make the need to speak to your honey about money even more pressing.
We’re not saying that couples who haven’t discussed their financial future love each other less than those who do, however. The whole point is that lack of planning – especially among partners who live together but aren’t married and thus aren’t covered by the same laws that protect the rights of married couples where division of property and assets is concerned – can cause serious problems.
Here are 5 ways we feel you can give your partner the gift of financial security:
1. Have that talk, regularly
It can be awkward to talk about money, even with your soulmate. But it’s important to have frank and honest discussions about finances and your shared goals.
If something unexpected were to happen to you, would your partner know the details of how to access your current account or the insurance policies you own? Your loved one should also know where the important information is kept in case they need to access it. Consider going through the relevant documents together and then storing them in a safe or similarly secure location that your partner could find and access in an emergency. Think of it as another gift to your partner, because you’re sparing them additional stress in what would likely already be a difficult time.
2. Update your retirement income plan
How will you fund your golden years? And what will happen to your spouse?
Leave nothing to chance by ensuring you make a CPF nomination where you can specify who will receive your CPF savings, and how much each nominee should receive in the event of your passing. In the absence of a nomination, all your CPF savings will be distributed by the Public Trustee to your family members according to the intestacy law or the Certificate of Inheritance (for Muslims).
And keep your insurance beneficiary instructions up to date, especially if you’re newly married or have remarried. In one report, an Aviva spokesperson revealed that only a small number of policyholders know the importance of nominating a beneficiary in their life insurance policies and that the vast majority of its individual life policies did not have beneficiaries named. Yet the consequences of this can be severe, not to mention distressing.
Your insurance company will consult with the executor of your estate to decide who to give the funds to. This will usually be your closest relative, but there can be complications and delays.
Taking just a few minutes to make a CPF nomination or update your insurance beneficiary instruction could go a long way in bringing comfort to grieving loved ones in time to come.
3. Give your partner legal rights
Another area where marital status makes a big difference is access to bank accounts and property if something should happen to you or your partner.
Property will automatically go to your next of kin – which could be a spouse, parent, children, sibling or other blood relative. But if you’re not married and want it to go to your significant other, you’ll have to specify that in your will. The same goes for money.
A different set of rules applies to HDB flats. Upon the death of a joint-owner, for instance, their share of the flat will go to the remaining owners, and if the sole owner or co-owner passes on, their share of the flat will be distributed according to their will, if there is one, or according to the Intestate Succession Act.
You may also want to set up a Lasting Power of Attorney in your partner’s name that would allow them control of your financial accounts if you become seriously ill or mentally unfit – this could save you and them a lot of upset at a difficult time.
Remember that “common law marriage” or a “de facto marriage” doesn’t exist in Singapore, so even if you’ve been together for a very long time, you won’t have the same rights as a married couple.
4. Take advantage of tax benefits
The government gives parents who are married, divorced or widowed some income tax relief through the Parenthood Tax Rebate. If one of you earns less than the maximum amount you can earn without paying any tax – you can transfer some or all of your share of any unutilised tax rebate to the other.
The one-off tax rebate ranges from S$5,000 to S$20,000 per child depending on the birth order and date of birth (or date of adoption for adopted children). If you do not use all of your rebate entitlement in a particular tax year, it can be carried forward for use in subsequent years.
5. Think about life insurance
Most of us tend to avoid thinking about this, but what would happen to your dependants if something were to happen to either you or your partner? This is important if you have a mortgage, large loans and debts, and even more so if you have children.
Life insurance can cost as little as S$20* a month. You can also consider getting a joint-life insurance policy, though you may not be able to divide this policy later if you break up.
Although it might not be fun, ensure your partner has a financially secure future even when you can no longer provide for them is one of the most loving things you can do for them.
If you’re thinking about taking your relationship to the next level (we’re talking shared bank accounts), read our article on discussing your finances before marriage.
* The premium amount of S$20 per month is for illustration purposes using Aviva’s MyProtector-Term Plan and is based on the following criteria – Male, age 30 at age next birthday (ANB), non-smoker, who opted for Policy Term: 15 years, with S$260,000 Sum Assured.
