A decision to get married – what could be more exhilarating? Following the proposal, the focus of many couples falls on the planning of the wedding. Our advice is to prepare by discussing the tough topics – financial and life goals, expectations, deal-breakers.
As we were preparing this article, one of altruWisdom Wise Owls shared this real-life story they have encountered in their practice.
It is a story of a couple who decided to get married after being together for less than a year.
Going into the marriage, Axel and Norah thought they were quite prepared. Both of them worked high-paying independent contractor jobs, Norah owned two investment properties she was renting out. The couple made the decision to purchase a home together, so they could start their married life from a fresh leaf.
While they seemed really financially healthy, a deeper look showed that there were quite a few risks they didn’t see.
Norah’s debt level was quite high, due to the outstanding mortgages on her investment properties.
Axel’s debt was also very high, from the student loans he acquired when completing his dental hygienist qualifications.
Because both Axel and Norah are independent contractors, their reported income is quite low, which resulted in a denial from the bank to issue another mortgage in their names.
A private lender offered them a mortgage at a substantially higher rate. Without any guidance, they took the loan, not fully understanding how that interest rate could affect them. After all, they needed the cash to fund their new life together.
Norah and Axel decided to get married really quickly, causing Norah’s family to be suspicious of Axel’s intentions and extra protective of Norah. They thought he might be after her for her money. This made Norah scared to ask her family for help or advice as she continued to make financial decisions.
Norah works at her family’s bakery, she hopes to take it over one day. Norah assumes she can just take it over from her parents, she has no idea about any tax implications.
When Norah and Axel signed up with altruWisdom, they realized there was a lot they didn’t know. They needed extra help. They signed up for the Wise Owl service, where they received help from a coach to walk them through the different risks they were facing. ,
Their Wise Owl helped showed them walked them through the altruWisdom method and gave them knowledge and confidence to continue making decisions on their own. Here’s a breakdown of some of the changes they made:
Organize all current documents. While going through the life events of getting married and purchasing a house, the couple will require access to their documents. Eliminating the stress of looking for them or finding out that they are expired or, worse, lost, helped the couple get the process started and feel an instant win. More importantly, they were much more confident because they now understood the importance of each document and how it fit into the overall picture.
Taught Axel and Norah about the process of purchasing life insurance and helped them find a fair and functional option. This policy exceeds the amount of debt they have, which keeps the two of them safe in the event of either of them. This step helped to give them a sense of security, as neither of them felt comfortable taking over a large debt load in the worst-case scenario.
Buying the bakery business. To find the most tax effective way for Norah to purchase the bakery, the Wise Owl pointed them to altruWisdom tax resources and showed them how to find the right kind of lawyer and accountant to help with the sale. A lot of estate planning was required, Norah’s family was grateful that she and Alex got the ball rolling. The whole family was better off as their wills and estates were now prepared.
Stabilize the family relationships by involving Norah’s brother in the decision-making process. Norah’s brother was able to see the relationship between Axel and his sister up close, and warmed up to him. He also no longer felt left out and appreciated being consulted in his family’s financial future. This eliminated frictions in the family and unnecessary stress associated with it.
By taking the initiative and getting a jump start on planning their future, Axel and Norah minimized many risks and prevented many issues. They also put themselves on track to reaching their life and financial goals they have set out together as a couple.
To read the full story and see other creative financial solutions click here.