For richer or poorer, you are in this together.
I applaud you for starting this conversation with your soon-to-be spouse.
Communication is key to any marriage. The ability to discuss money together is priceless.
Before you say your “I dos,” be sure to clarify who$e is who$e.
As I always tell clients who are contemplating marriage (or remarriage): "Love may be blind, but it's best to go into your marriage with both eyes open."
With the average age for those getting married being 31 for men and 29 for women, more often than not the happy couple will be merging money from two separate lives.
A recent article in CBS Boston titled “Couples & Money: Ours? His? Hers?” addresses this trend and provides some useful direction for lovebirds in this situation.
So, what assets do you need to consider?
Did you both own your own separate homes?
It may be wise to sell both and purchase your first home together.
Maybe one of the homes you own, you both love. You decide to keep it.
Be sure to sort out ownership. Do you want add the other spouse on the deed title and mortgage?
These details are important but can be overlooked.
Marrying someone does not mean you marry their credit.
Even if it is bad. Even really bad.
In fact, if your spouse has poor credit, keep your credit reports separate.
Any debt brought into the marriage should be paid by the debtor.
Does this sound cruel?
Your spouse will thank you when you can use your good credit report and credit score for future purchases like a home or automobile.
Indeed, a win for both of you.
If you are both employed, then you may want to keep this income in your own separate bank accounts and each maintain your own separate credit cards.
Be sure to also have a joint checking account for savings and daily living expenses.
A shared credit card will be useful for those household expenses as well.
Keep your pre-marriage stocks, bonds, mutual funds, and savings separate. For your future goals, set up a joint account and use those separate accounts to help you achieve those retirement goals.
Update any beneficiaries on your retirement plans, life insurance policies, IRAs, pensions and annuities. If you fail to do this, your dearly beloved will not inherit them.
Both of you should contribute the maximum available amount to your employer provided retirement plans. Also, select the better of your two health care insurance policies.
Last but certainly not least, create or update your estate plan to reflect your new nuptials.
By following these simple steps you will be increasing the odds of marital bliss.
Financial friction is one of the top triggers for marital discord (and, ultimately, for divorce).
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: CBS Boston (June 8, 2016) “Couples & Money: Ours? His? Hers?”