Valentine's Day is here. This day can be an exciting time for those with a partner as they think of ways to express their love. It is also one of the most popular days of the year to get married or engaged.

One of the least romantic, but still very important, aspects of a relationship is your finances. In New Zealand, once you are married or have been in a de facto relationship for more than three years, the implications on your finances can be significant.

Discuss your finances

Money can be a common source of trouble for couples. You may have polar opposite views on what to spend money on and how much. Before you move in together, have a discussion about whether expenses will be shared and the mechanics of how to do this.

It is also good to know whether your partner has any significant debts. If a debt is considered to be a relationship debt, it must also be divided 50/50 at the end of a relationship. This is the case even if one party is not aware of the debt.

Consider a pre-nuptial agreement

If you have come into your relationship with more assets than your partner, or you earn significantly more than them, consider signing a pre-nuptial agreement. Without one, you will likely have to divide your property 50/50.

Some people can be surprised by what is considered relationship property at the end of a relationship. For example, the value of your family home must be divided 50/50, even if one party did not financially contribute to its purchase.

A pre-nuptial agreement allows you to contract out of the rules of the Property (Relationships) Act 1976 and set your own agreement for the division of your property if your relationship ends. You can agree on what will be considered relationship property and what will remain separate property for each of you.

For the agreement to be valid, you must both obtain independent legal advice. The whole process can take up to six months, so it is best to start the conversation early. Ideally, this would be before you have been in a relationship for three years or before you got married. If you are already past this threshold, it is not too late. However, your negotiating position will be weaker as the default rules of the act will apply.

Once you have an agreement, don't forget to update it as the years go by. It is a good idea to revisit the agreement every five or so years to check that circumstances have not changed to make it unfair (e.g. you now have children together).

Help from family

As house prices increase, parents who are able to afford it may help their children get on the property ladder. If you or your partner's parents offer their help, make sure it is clear whether this is a gift or a loan. When this is not documented it can cause disagreement if you separate or the parents need the money back one day. Avoid stress later by documenting it in a legally binding agreement.

Flashy gifts

At the end of a marriage, sometimes the parties may fight over money they spent on each other. It is important to remember that anything you gift to your partner – big or small – will usually be considered their separate property at the end of the relationship. As an engagement ring is usually presented as a gift, the same rules apply. Unless you have a pre-nup agreement in place, any engagement ring you give your partner will be theirs if your relationship ends.

Preparing for the worst

If you are in a serious relationship, it may also be time to think about what happens if one of you dies. This is particularly important if you own property together or have children from a previous relationship. Discuss these issues so no nasty surprises occur later that may cause family rifts.

Conclusion

If your relationship is getting serious, it is probably time to have a discussion about your respective financial positions. It is always best to bring this up earlier, rather than later. Putting everything out in the open and preparing for various scenarios provides confidence and ensures you have a plan if you hit a rough patch. This Valentine's Day take the time to celebrate your love but also schedule in some time for the not-so-romantic chat. Happy Valentine's Day!

This article was first published by the NZ Herald