Tying the knot raises multiple financial issues

What financial issues need to be addressed when getting married?

The marriage process, regardless of age, requires careful thought about a number of financial situations a couple will likely face. With financial disagreements being a leading cause of marital problems, why not tackle them ahead of time? This may include reaching out to your financial planner and other legal and tax advisers well in advance of the nuptials.

Related - IRAs: How to make an early withdrawal

The starting point is to have a candid discussion with your fiancé about your overall finances. For example, how much debt is each of you bringing to the marriage? What about savings? How is your credit rating? The older you are, the more (good and bad) financial baggage you're likely to bring to the partnership.

Next, from a savings standpoint, you’ll need to decide if you will be combining accounts or keeping them separate. Your financial adviser can walk you through what will be needed to combine checking, savings, and money market accounts. He or she can also advise you about adding or changing beneficiaries on your individual retirement plan and other retirement plans.

Even if you decide to maintain separate accounts, it may be helpful to have at least one joint account to pay for shared expenses, such as mortgage or car payments, rent, household expenses, and childcare. This account is meant strictly for household needs, and it allows you both to keep track of how you are spending money. A joint account can also help avoid trouble in case one spouse dies. When a spouse or common-law partner dies and there are separate accounts, the survivor will be excluded from the other separate account if the estate goes into probate. That could take months and add additional expenses due to court and attorney fees. 

If you are both employed, you must take time to review and coordinate your employee benefits. You might save money by eliminating duplicate health care, for example. This process also allows you to determine, and then make any changes to, the beneficiary designations on retirement plans and insurance policies held through your employers.

Next: Make financial goals as a couple

Next, sit down and make financial goals as a couple. Start by creating an annual budget, as well as a contingency plan in case a spouse gets laid off or becomes disabled. Make sure you have an emergency cash reserve equal to several months of income. Designate who will be responsible for paying the bills and reconciling the checkbook. Also look beyond your current financial situation. For example, discuss what you envision your retirement will look like, and whether current retirement account contributions are sufficient to achieve your long-term goals.

Also see: How a second marriage affects estate planning

While it seems a bit unromantic, you will also need to update your wills and power of attorney documents. An estate planning adviser can discuss the full array of estate planning tools, such as various trusts, that might be relevant once you're married.

People who have been previously married bring additional financial issues to the table, especially if they have children or are required to pay alimony, child support, or insurance premiums under the terms of a divorce settlement agreement. Also consider whether your remarriage will nullify any entitlements to assets from a former spouse. For example, getting remarried could invalidate your right to claim an inheritance or other financial interest. Meet with your advisers to address these issues whenever you are considering blending your finances.

Recommended: Health savings account provides triple tax benefit

Remember that whether it's your first time down the aisle, or not, marriage is a celebration. Don't let all of the financial and administrative details that go along with your special day spoil it. Meet with your financial, tax, and legal advisers to establish a budget and tackle other financial and legal issues head-on. A little planning on the front end can alleviate stress well beyond the wedding day.

Next: What is a trust?

What is a trust?

A trust is a written arrangement under which one person, called a trustee, holds legal title to property for a beneficiary. You can be the trustee of your own living trust and keep total control over the assets in the trust.

Trusts generally fall within two categories:

• Revocable trusts that you (the grantor or settlor) create and control during your lifetime. You can revoke or amend the trust as long as you live.

• Irrevocable trusts, in which the grantor relinquishes the right to amend or cancel the trust at a later date.

More from Urology Times:

This trust may benefit special needs individuals

Can life insurance be used to pay estate taxes?

Legislation renews IRA charity tax break
 

Send your questions about estate planning, retirement, and investing to Joel M. Blau, CFP, c/o Urology Times, at UT@advanstar.com. Questions of general interest will be chosen for publication. The information in this column is designed to be authoritative. The publisher is not engaged in rendering legal, investment, or tax advice.

Subscribe to Urology Times to get monthly news from the leading news source for Urologists.