Are you getting married? Well, long before the confetti settles on the church floor it's important to sit down with your fiancé to discuss finances.
Marriage is, among many things, a financial commitment to each other, from who pays the mortgage, debts, and bills, to agreeing on saving goals and guardianship of children.
With disagreement about finances listed as the number one cause of divorce, it's important to get these issues out into the open from the start. For many expats unsure about the legal systems of the UAE, this can be a grey area.
Here is a number-crunching step-by-step guide to making your marriage work.
1 Pre-nuptial agreement
While divorce will be the last thing on your mind as you tie the knot, a pre-nuptial agreement can save many a battle if your marriage ends up in the courtroom. If one of you owns a business, expects to receive an inheritance, or has a trust fund, it is important to agree on how these will be handled both during the marriage and in the event of a divorce.
Mary Barton, Family Specialist Solicitor at James Berry & Associates, Dubai, says: "How many of us, when we fall in love and decide that we want to spend the rest of our lives with somebody else, start thinking about getting divorced? But, anybody entering into a relationship, irrespective of religion, needs to have a full understanding of the expectations that the other person has of the marriage – especially in relation to finance."
But the rules vary. "A pre-nup is not recognised in every jurisdiction and it depends on the nationality of the parties. It's easier for nationals of the UK because English law provides for pre-nuptial agreements to be enforceable, although the court always has a duty to consider all of the circumstances at the time the parties come before it."
2 Bank account
While your heart may say, 'what's mine is yours', it's advisable to keep your own separate accounts and agree to both contribute to a joint account for joint expenses.
If one of you earns substantially less, you can adjust the contributions to the joint account pro rata. Separate accounts also help in case of death. In Dubai, if a couple has a joint account and one party dies, the account will be frozen until the beneficiaries of the estate have been established by the Dubai court.
Tasleem Sayani, Wills, Succession and Estate Planning Solicitor, James Berry & Associates, Dubai, says: "It's always advisable for each person to have their own account, as well as a joint account, so that they will not be faced with a circumstance where they can't access any funds because they're all held in a joint account. In the UK, and many other jurisdictions, proof of death is enough to transfer the funds in a joint account to the survivor – basically, you just produce a death certificate. Here in Dubai the situation is very different and can cause major problems in terms of cash-flow."
Once you decide to set up a joint account, you have two options: a local bank in the UAE or an offshore account. You may prefer to place your money with an offshore bank that follows the common law of your home country and is not subject to local litigation.
3 Writing a will
"I'm aware that our legal rights are not simple and straightforward, and that my wife probably isn't automatically entitled to ownership of our home if I died. It's particularly important to contact a solicitor and get this organised here as we are expats living with the unknown," says Matt Trehy, 32, a Technical Director from the UK.
When an expat dies in the UAE, banks are instructed by the courts to freeze all accounts of the deceased, including joint accounts, until the Shariah Court has received an attested will. So a will, which is your only way of conveying your dying wishes for your assets, is crucial.
Diana Hamade, Founder, International Advocate Legal Services, Dubai, says: "The UAE courts do advise expats to have a will which will be recognised and very much acknowledged by the courts here in case the person dies."
Your home is your castle – and probably your biggest-ever purchase – so ensure that this asset is safe and secure by signing a joint mortgage with your wife or husband.
Solicitor Sayani says: "It's always good sense for a couple to own large assets jointly. Then, if one of the party dies, it allows the joint holder to retain the value of at least half of that property within their own name if, for example, overriding laws distribute the other half's share to someone other than the spouse." It is also important to make sure you can both afford to keep up mortgage repayments, especially in these uncertain times.
Rajesh K, Administration Manager, Life Insurance Corporation Dubai – which offers marriage plans predominantly for Indian nationals – says: "It's important for couples to think about their finances, starting with setting aside money for contingencies. It's important to start with short-term planning and make sure they have at least three to six months' income in their bank account for emergencies, unexpected job loss, and so on. Few people actually do this, however. They should then look at long-term financial planning such as medical and life insurance."
Be honest about any debts that you have and show your entire hand. Any debt raised during your marriage is very likely going to be debt owed by both of you, even if only one of you incurred it, so don't pay the price for overlooking this in the rosy glow of engagement. Before you tie the knot, list all your assets, debts and liabilities – this will come in handy if you end up getting divorced, and can save you tens of thousands of dirhams in legal and accounting fees. Also, decide whether you will keep separate credit cards or get new joint credit cards.
Sayani says: "People are responsible for the debts they incur during their lifetime in their sole name and, on death these debts will generally be paid from the estate of the deceased."
Adds Barton: "During your lifetime if there are joint debts then there's joint and several liability, which means that the creditor can go after either one, depending on who is the one with the money."
6 Shariah law
Shariah – the primary source of Islamic law automatically applies to Muslim estate holders when they pass away; non-Muslim couples, however, are governed by the law in their home country.
Hamade says: "The courts don't have any jurisdiction except for implementing the law of the expat's home country. For example, if an expat dies and he or she has property here, then the laws of his home country are implemented in regard to inheritance."
However, there is some uncertainty in the UAE law when it comes to immovable assets – property or real estate. The Civil Code says that Shariah law applies regardless of whether the individual is Muslim or not, while the Personal Status Law says that immovable assets can be disposed of by a will; ultimately, the courts have the final say. Sayani explains: "In regards to movable assets (bank accounts and shares), as long as the person has a will that's made in accordance with the laws of their own country, this is sufficient. Where real estate is concerned we can advise an individual on how to ensure this passes in accordance with their own wishes."
7 Planning for the future
It's important to discuss at this early stage how you will handle family money and personal expenses when you have children, how you will fund their education, and how you will save for your retirement. Don't be afraid to look ahead to the future and discuss your financial goals and how you will save for them. Also, seek advice from a financial advisor on how to realise your dreams and protect you and your family against the unexpected.
Rajesh K says: "Very few people come to us before marriage but once they have children they start to think about life insurance, education plans and so on."
If you have people who depend on you, having life insurance is critical. The demand for and value of life insurance premiums in the UAE rose in 2008 with a forecasted annual growth of 18 percent until 2011; contributing growth factors include the rising demand for life insurance from mortgage owners keen to protect their family.
"The market turbulence has alerted people to take stock of and review their medium- and long-term financial goals in a number of areas," says Nigel Watson, Sales Director at the financial planning advisory firm Nexus, Dubai.
The big day
They say it's the biggest day of your life and financially, at least, that's often true. Here are some money-saving tips to get the most value out of your wedding day
- Prioritise: Which is more important to you, a professional photographer, stylish flowers on the table, or designer invitations?
- Wedding loan: Can you afford to make the repayments, and have you planned your expenditure so that you borrow as little as possible?
- Involve friends and family: Do you know a cakemaker or a decent photographer? Is your brother a DJ or musician? Ask for their help in lieu of a wedding present
- The Venue: Pick a midweek day for a wedding and save yourself a fortune on booking fees
- Honeymoon: Set up a honeymoon fund instead of a wedding present list, and shop around for free upgrades and specials for honeymooners