WHEN BILLS COME IN, LOVE GOES OUT – DON’T LET YOUR FINANCIAL CUL-DE-SAC BE THE DEATH OF LOVE

When bills come in, love goes out.  I know that it’s as true today as is has been throughout history.

 

I’ve practiced on the Gold Coast for 15 years,a city where, financially, there are high highs, and low lows (and where the GFC hit earliest, and hardest of all).  When people in a marriage or de facto relationship are exposed to financial pressure, their relationship also endures extreme pressure.  While some relationships will withstand that stress, many will not survive.

 

In fact, financial strain is a reason very commonly heard by family lawyers as motivating their client’s decision to separate.

 

That situation usually presents itself as a series of unfortunate events.  One or both parties losing their jobs, and being unable to meet repayments on the family home, their bank knocking at the door to repossess it.  A family business losing a major client and enduring a cashflow crisis, leaving creditors and staff unpaid, demands for payment not being able to be satisfied.  A family member becoming ill and requiring expensive medical care, eating into savings and household income.

 

The end result is always the same – less money coming in, and financial commitments piling up.  That can be a pressure cooker, and ultimately lead to relationship breakdown.

 

Singer, Lunchmoney Lewis nailed this correlation between financial duress, and separation, in his song, “Bills”:

 

 All these bills pile up my desk
They looking like a mount (Everest!)
All the little kids run around
I can hear their stomachs growl (grrr!)
It’s a full moon out
And my girl just keep on howlin’ (ooh, ooh)
She said she gonna leave me
If I don’t come home with fifty thousand (fifty thousand?)

 

I acknowledge that there’s not much law in all of this.  But it is nevertheless important to observe.  That’s because, as a lawyer, I see this dynamic all the time.  And it has occurred to me in many of those situations that a couple which has buckled under the strain of financial woes could have achieved a different result had they approached their troubles in a different way.

 

We often insure our homes and cars to protect against financial damage and loss, but when it comes to our relationships, we are often ‘under covered’ – we’ve done nothing to plan for the time when our relationship comes under threat, and have no ‘plan’ to shield that relationship from the blowtorch that is financial strain.

 

I work with lots of business owners, and many of them have plans for dealing with ‘situations’ – action plans if there is an electricity outage; a plan of attack if their customer data comes under attack; an approach to smooth over some viral social media criticism.  The next step is known well in advance, and immediately implemented if any business risk comes to pass.

 

But rarely do I see such planning when it comes to our relationships coming under strain.

 

So what can be done differently?

 

The following will help in beginning to assemble a plan to help your relationship ‘roll with the [financial] punches’ which might come your way:-

 

ACCEPTANCE

 

Even the strongest relationship can be rocked by the unexpected.  I often find myself quoting that old adage – life is what happens while we’re busy making other plans.  The first part of prevention is accepting that life is such that it will throw us challenges, and that some of those changes will involve money.  If we accept that premise, then it is a case of being prepared for those challenges.  The question is this:  what will you do if your relationship suddenly comes under extreme pressure?  Knowing the answer to that question means that you’re already better prepared than most.

 

SPECIFIC PLANNING

 

Taking the time to get your ‘house in order’ can mean a world of difference once a financial challenge materialises, as in most cases, the following important steps cannot be done after the fact:

 

Financial Agreement:  I have written in previous blogs (Taking the ‘Grey’ out of Divorce – Using a Financial Agreement to make your Business’ Future ‘Black and White’) that Financial Agreements are a legal tool allowing couples specify what will happen with relationship wealth in the event of relationship breakdown.  Some couples use them to quarantine particular assets (such as a property inherited from family, or an interest in a multi-generational family business).  Living life, during a relationship, in accordance with the clear financial boundaries which are established by that Financial Agreement, can be important when managing the fallout from financial problems;

 

Asset structuring:  Be thoughtful about how you acquire, and hold, your wealth.  Before doing so, take advice from a specialist lawyer about the ideal structure for your circumstances, taking account of the classes of risk you might face.  Implementing, and living by, this approach, may well mean that the fallout from any future financial challenges is minimised, or at least better controlled;

 

Insurance:  Talk to your financial adviser to make sure that your income protection and disability insurance cover is appropriate – it can be a godsend in covering situations of sudden ill-health.  Likewise, ensure that cover for business risk is in place.  To do so can mean the difference between a financial ‘challenge’ and a financial ‘disaster’;

 

Estate planning:  It always amazes me how many people do not have a Will.  Lots of financial problems for the people we leave behind when we die arise from poor estate planning.  Be sure that you and your loved ones have a Will specifying clearly what is to occur with wealth in the event of their death, and a Power of Attorney which appoints trusted people to make financial decisions in the event of incapacity – not creating this clarity can create enormous financial challenges for our surviving family members.

 

It’s all very well to plan, but if you are facing a financial crisis, today?  Here’s what you can do to lessen the impact of that crisis on your relationship:

 

A BURDEN SHARED IS  A BURDEN HALVED

 

I often see situations where one party in a relationship has been struggling under the burden of financial problems, practically alone.  They report a situation whereby they have felt like an ‘island’ – left by their spouse to deal with the problem, with no offer to help in managing it.  The perception is that the other spouse has simply gone on, spending money or enjoying lifestyle as if there were no problem – taking no responsibility for the situation, or even making it worse.

 

The trouble is, when that perception is raised during the family law process, much of it is news to the other party – they often report that they were never really made aware of the nature or extent of the problem, and were oblivious to it, such that they could not have made any meaningful contribution to its resolution.

 

Frankness and openness is the key here.  Hiding the facts, no matter how confronting, will not help.  For you to be able to manage any challenge, you will need to know that your spouse is shouldering that burden alongside you.  They can only do that if you tell them about it, without any sugar-coating.

 

ACT EARLY

 

I have worked with insolvency practitioners for many years, and they very often remark ‘If only the client had done something sooner, we could have achieved a much better financial outcome’.  Problems tend only to be resolved with positive action, and that begins with the taking of advice – from your accountant, from a solvency consultant, from a lawyer.  Acting promptly may mean that the effects of the financial problem can be better contained.  Consider involving your spouse in those meetings, so that they can hear the advice too, as you can then both have ‘ownership’ of the steps which need to be taken from that point.

 

BE REALISTIC

 

The purpose of taking advice is to assemble options, and to develop a plan to manage your situation.  If that advice is that some tough decisions are required, such as selling down an asset, or having to approach lenders or creditors, stick to the plan.  It is painful, but if the advice received is that there is no realistic alternative, then delaying is unlikely to achieve anything of worth.  Being united when following through with the ugly things that need to be done is how you will get through it.

 

DON’T GO IT ALONE

 

Problems can consume us if we carry them around in our heads.  Engage a professional (counsellor, psychologist, etc) to talk about the challenges you face.  This is a forum to get stuff off your chest (in a cone of silence), and unburden yourself of that which you feel can’t be said to your spouse.  Divesting yourself of that mental baggage will allow you to focus on problem solving, and make you more emotionally resilient.  Ultimately, it will enable you to be in the right frame of mind to receive help from your spouse, and to tackle that which lies ahead of you.

 

GET HELP WHEN NEEDED

 

If, despite revealing the truth of the situation, there is no sharing of responsibility in managing it from your partner, recognise that, and get professional help before that situation becomes divisive in your relationship.  Use that as an opportunity to talk about how you are feeling, and to ask for what you need from your spouse.  You are giving your partner a chance to join with you in problem solving.  Without doing so, you will begin to feel resentment towards your partner.  One of the greatest threats to relationships is where one party feels that the other has become part of the cause of the problems, rather than a contributor to solutions.

 

You get the point – when dealing with life’s curve balls, prevention is better than cure.  The above applies to any threat a relationship faces, not just those which are financial in nature.  Reading this, you may feel that you are thoroughly prepared to rise to that challenge if you ever face it.  If so, great.  Just remember to keep your plan updated.  If you are not so prepared, use the above as a guide to shield your relationship from peril if, and when, those bills do come rolling in.

 

http://www.danbottrell.com

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