‘Til Death Do Us Part: How Does Marriage Affect Your Finances?

‘Til Death Do Us Part: How Does Marriage Affect Your Finances?

how does marriage affect your finances
Wedding season is quickly approaching and happy couples everywhere are ecstatically planning the events of their big day. Before saying “I do” it’s important to gain a solid understanding of the financial ramifications associated with committing to your soul mate. Be sure you can answer the question: how does marriage affect your finances?

Taking on your partner’s finances

When you’re joined legally so are your finances, so you need to have an honest conversation about where you’re both at financially. This conversation should include how much you’ve saved, how much debt you’ve incurred – whether it’s student loans, credit card debt, or another form – and what your income is. After you have the details, figure out how you’ll handle your bills and how things such as your taxes will be affected.

Married filing jointly or married filing separately?

Taxes are confusing enough as it is, but they may become even trickier when you go from a “you” to an “us.”

First off, the government cares about your wedding date. If you get married on December 31st or before they consider you married for the whole year. If filing your taxes as a single would be better for you, you may want to hold off on saying your vows until January to get one extra year of tax benefits.

Secondly, being married can offer tax perks for some. The couples who get the best benefits are the ones where one spouse makes significantly more money than the other. Be sure to calculate your taxes filing jointly and separately to see which filing status offers you and your new spouse the better tax return.

Lastly, even if you don’t get much of a tax break, there are other perks associated with marriage such as your capital gains tax exemption being doubled and your ability to transfer assets to your partner tax-free during your lifetime.

What’s yours is mine, but not always

When it comes to savings, debt, and marriage, there are a few guidelines you should know about. When you get married, if one of you has debt it will remain the sole responsibility of the person who incurred it and brought it into the marriage.

This means, in the event of a divorce, you’ll not be responsible for the student loans or the credit card debt your partner had before walking down the aisle. However, any debt you and your spouse acquire while being married, such as a mortgage, will be the responsibility of both you and your spouse if a split were to happen.

A similar situation happens with your savings accounts. Any money you bring into the marriage with your name on the account will remain yours in the event of a divorce. Any joint assets, money and tangible items included, earned during the marriage will mostly likely be split 50/50 during divorce but can vary based on state law. However, there is a chance the money you brought into the marriage may be factored into the split when determining such things as alimony.

Bad credit plus good credit equals?

Despite popular belief, when you get married your credit reports do not merge. Your credit is tied to your social security number and only yours. However, both credit reports will reflect any joint accounts you open, any accounts where one of you is a cosigner, and any existing accounts you or your spouse adds the other as a joint account holder.

Understanding marriage and finances

To you, and many, marriage is an expression of love and commitment to your partner. However, from the government’s perspective, you and your partner’s union is a business transaction with many legalities. This is why it’s critical to discuss your financial situation with your partner and learn your rights regarding shared and personal property.

What others factors should you consider before saying “I do?”


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