Getting Married: How Marriage Could Potentially Affect Finances

Building Wealth • Retirement Benefits • Estate Planning
• Tax Planning • Debt Management • Family Matters

Marriage affects your finances in many ways, including ability to build wealth, plan for retirement, plan your estate, and capitalize on tax- and insurance-related benefits.

  • Building Wealth

  • If both you and your spouse are employed, two salaries can be a considerable benefit in building long-term wealth. For example, if both of you have access to employer-sponsored retirement plans and contribute $18,000 a year, as a couple you are contributing $36,000, far in excess of the maximum annual contribution for an individual ($18,000 for 2016). Similarly, a working couple may be able to pay a mortgage more easily than a single person can, making it possible for a couple to apply a portion of their combined paychecks for family savings or investments.

  • Retirement Benefits

  • Some (but not all) pensions provide benefits to widows or widowers following a pensioner’s death. When participating in an employer-sponsored retirement plan, married workers are required to name their spouse as beneficiary unless the spouse waives this right in writing. Qualifying widows or widowers may collect Social Security benefits up to a maximum of 50% of the benefit earned by a deceased spouse.

     

  • Estate Planning

  • Married couples may transfer real estate and personal property to a surviving spouse with no federal gift or estate tax consequences until the survivor dies. But surviving spouses do not automatically inherit all assets. Couples who desire to structure their estates in such a way that each spouse is the sole beneficiary of the other must create wills or other estate-planning documents to ensure that their wishes are realized. In the absence of a will, state laws governing disposition of an estate take effect. Also, certain types of trusts, such as QTIP trusts and marital deduction trusts, are restricted to married couples.

  • Tax Planning

  • When filing federal income taxes, filing jointly may result in lower tax payments when compared with filing separately.

  • Debt Management

  • In certain circumstances, creditors may be able to attach marital or community property to satisfy the debts of one spouse. Couples wishing to guard against this occurrence may do so with a prenuptial agreement.

  • Family Matters

  • Marriage may enhance a partner’s ability to collect financial support, such as alimony, if the relationship dissolves. Although single people do adopt, many adoption agencies show preference for households that include a marital relationship. The opportunity to go through life with a loving partner may be the greatest benefit of a successful marriage. That said, there are financial and legal consequences that you may want to explore with your beloved before tying the knot.

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