Miranda Marquit is a a freelance writer and professional blogger specializing in financial topics. Her work has appeared in numerous media, online and offline. Her blog is Planting Money Seeds. This article originally appeared on Quizzle.com.
Marriage is a wonderful, joyous event, but almost invariably, it’s one that brings with it a lot of changes. Some of those changes are financial, and ought to be discussed before the wedding. Here are some financial effects of marriage to consider:
Joint or Separate Finances
A Google search for “Joint vs Separate Finances” produces over 88 million results, indicating just how important this topic is. Whether or not to combine finances may be the most significant financial decision you make in your marriage, as it will affect how you pay for everything while you’re married, including your living expenses like housing, food and utilities, and eventually, childcare expenses if you have children.
If you both have health insurance coverage through your employers and intend to remain with your current companies, look into both benefits programs to see which one is better. One employer might have a lower premium, while the other might offer a larger provider network. You’ll need to decide if you want to combine coverage so that you are both covered by one of your employers (which is usually more cost effective). If you decide to combine coverage, you’ll need to know the deadline for making the switch, as many employers only offer a brief window to add a spouse to your health coverage after the marriage certificate is issued. If you miss the window, you’ll have to wait until the next open enrollment period to make changes to your coverage.
Various accounts and policies like retirement accounts and life insurance policies have a named beneficiary to whom the funds go upon the account or policy holder’s death. If you want your new spouse to be the beneficiary, you may need to file a change of beneficiary form to change the named beneficiary. Alternatively, if you want the funds in certain accounts to go to someone other than your spouse, you should contact the account administrator to ensure that your marriage does not invalidate a previously named beneficiary.
If you and your spouse have comparable incomes and fall in the 25% or higher tax bracket, getting married may mean you actually have to pay more income tax than you did when you were both single. In fact, even if you both received refunds the year before, you may find that you owe tax for the year in which you got married. This is known as the marriage penalty. You may wish to consult a tax expert to determine whether you should take action before or after your marriage to minimize the amount of tax you will pay together.
Some states, like California, are community property states, which in essence means that half of everything you earn during your marriage belongs to your spouse. In the event of a divorce, any property brought into the marriage or acquired during the marriage – for example, via inheritance – may be considered marital property that should be divided equally. Thus, if you intend to keep some property separate from your marital property, you may want to consider a prenuptial agreement, or some other means of establishing the separateness of that property.
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