The short answer to this question is “It depends”. Every year, around 10 million marriages take place in India. While it was formerly the standard in India for couples to pool their money after marriage, many couples are currently adopting a different path. Some couples choose to have independent assets despite sharing the obligations and costs.
According to experts, each couple should select the solution that works best for them. Both husband and wife should work hard to meet their financial objectives and create equilibrium between preserving their current lifestyle and saving for the future. With financial mismatch being one of the leading reasons of divorce globally, it is critical for couples to be on the same page in this regard.
Combining the finances:
The benefits of combining both assets and liabilities after a marriage are numerous. Both husband and wife will have a firm grasp on their money. Financial management gets easier when there are fewer accounts, invoices, and banks to manage. It becomes simpler to establish financial objectives and collaborate to attain them.
Regardless, both couples must be involved in all key financial choices. If just one partner manages the finances, the other may lose financial autonomy. One disadvantage of merging commitments is that one spouse’s poorer credit score and financial struggles may impact the credit score and trustworthiness of the other.
The key to successful marriage life are honesty and openness. To avoid future disagreements, while forming combined investments, both spouses should be fully aware of them and have legal ownership interests. If one spouse is a high-risk investor and the other is extremely risk-averse, they will need to reach an agreement on a strategy that accommodates both of their risk preferences.
Sharing assets and liabilities:
A lot of couples presently want to keep their finances separate while sharing obligations and costs. Taking out a loan to purchase a capital asset such as a house is a positive thing. If both couples work, the loan arrangement should be in both of their names so that the EMIs and tax advantages are shared evenly.
However, if one spouse purchases a vehicle, the EMIs can be carried only by that individual. Taking out a combined vehicle loan has no benefits, other than lowering the EMI load; there is also no tax incentive for this loan.
What is a Pre-nup?
To safeguard their wealth after marriage, many couples now seek a prenuptial contract (pre-nup). A pre-nuptial agreement is a contract signed by the couple before they tie the knot. It includes the conditions of settlement in the event of future conflict. Such an agreement, however, is not a lawfully binding contract. While pre-nups are not legally enforceable, Indian courts have used them to learn about the spouses’ preferences and to determine how assets should be distributed between them. Pre-nups may be advantageous in this regard, thus couples should only prepare them with the assistance of a specialist, such as a lawyer or solicitor with sufficient understanding of the subject.
The concept of marital property:
There is a lot of misunderstanding about what a marital property is and what an individual property is. Marital property is any asset, whether movable or immovable, acquired by the spouses after their marriage. In a similar way, under this definition of marital property, all responsibilities, like as debts and mortgages, rentals, and other significant costs, become shared. Things purchased post-marriage with the spouses’ combined salaries, items purchased by one but utilised substantially by both, wedding presents, and any other wealth generated post-marriage are considered equally held by both the persons.
The question of preserving independent ownership of some assets, particularly those obtained before marriage, should be talked about and decided upon by the couple. Individuals should have separate bank accounts, Public Provident Fund (PPF), and Employee Provident Fund (EPF) accounts for their own investments.
A lot of couples may benefit from a hybrid strategy, in which certain assets and obligations are jointly handled while others are kept distinct.
Handling the expense burden:
When it comes to household expenses, one possibility for the couple is to share the monthly home expenditures. If the total monthly expenditure amount is Rs. 60,000, each spouse may pay Rs. 30,000. Whilst such a split is equal, it is not always fair. Consider if the wife earns Rs. 1.2 lakh while the husband gets Rs. 60,000 and both provide the same sum, the wife pays just 25% of what she makes while the husband spends 50%. The one who earns more will have more money to spend on their other personal desires and stuff. The best strategy here would be to divide costs according to their respective income levels.
Let us understand what is ‘Stree-dhan’:
‘Stree-dhan’ is a Hindi phrase that translates to “women’s wealth”. ‘Stree-dhan’, according to Hindu law is anything a woman obtains during her entire life. This is something to which the women have sole ownership; their husband has no right over any portion of it.
Gifts, jewelry, money, moveable and immovable properties, and so on that a lady acquires prior to and during marriage, childbirth, and widowhood are all considered ‘Stree-dhan’. These presents might come from her own relatives or from her in-laws. Women should establish a note of all such things, document them, and preserve a record so that if their marriage breaks, they can prove what they can reclaim as “Streedhan.”
