Marriage, jumping the broom, tying the knot, taking the plunge, getting hitched… Whether you are pro, or con, marriage can actually help you improve your finances. Sure, that’s not a very romantic idea, but it is true. Joining forces as an economic unit can be good for your emotional health and your financial wealth.
Here are just a few ways that tying the knot can help improve your financial standing.
Greater sense of security – spouses can rely on each other.
Legal protections – famously, spousal communication is privileged. But spousal protections go much further and extend to dividing business income, and claiming Social Security benefits.
Unlimited marital deduction – Spouses can pass unlimited assets to each other at any time, tax free!
Social Security may be higher (for the lower-earning spouse).
Piggyback on benefits – health insurance, auto insurance, etc., cover your spouse and may open opportunities for policy premium discounts.
Less tax burden, ‘marriage bonus’ (if one spouse is low, or non-earning spouse).
Greater wealth building opportunity – spouses generally share the same financial goals and can work together to build wealth using tax, income, real estate, and various other strategies.
Spousal IRA for non-working spouse – this is a great benefit for a stay-at-home spouse to be able to plan for retirement.
When you do jump the broom, don’t forget to review titling on all financial accounts including bank, retirement, and investment accounts as necessary. Making sure your beneficiary designations are up to date is critical. Be sure to review and update your beneficiary, pay-on-death/transfer-on-death (POD/TOD) forms for all financial accounts. Critically, you need to review and revise your estate planning documents and insurance policies. After all, you wouldn’t want an untimely death after starting your new life that unintentionally leaves your estate to an ex-spouse or sibling if that wasn’t your intent.
Naturally, the question arises up about whether marriage can be harmful to your financial health. There are a few areas of caution, but you shouldn’t let it stop you from marrying the one you love. With that said, here are a few ways that tying the knot could be detrimental to your financial standing.
Cost of wedding – be careful not to splurge and wrack-up too much debt.
Debt and wealth – acquired during marriage is co-owned in community property states.
Liability – for judgements, liens, again, generally if acquired during marriage.
Benefit loss – if widowed, remarrying may jeopardize survivor’s pension or Social Security benefit.
Loss of aid – if relying on aid (i.e., Medi-Cal/Medicaid) your new joint income may push you above thresholds that allow you to qualify.
Higher tax burden – ‘marriage penalty’ – if both spouses are high earners, you may be pushed into a higher income tax bracket.
Overall, marriage is a boon to your financial well-being. However, there are a few instances like those noted above that should be considered prior to marriage. If the loss of the benefit is minimal compared to what you are gaining by marrying, by all means, proceed happily down the aisle. Just be sure you are aware of how marriage can change your financial life.
As an independent Certified Financial Planner™, I can help you navigate the benefits and potential pitfalls of marriage. Contact me and let’s get started. #talktometuesday #education #Hireaplanner #stressfree #marriage #divorce #estateplanning #death #savings #retirement #CFPPro