As we’ve already discussed, life brings with it many changes (both planned and unplanned) that can impact your financial plan and the future of your finances. Planning ahead, whenever possible, is a great tool to counteract the uncertainty that comes with those life changes, and by doing so you are giving yourself time to prepare. Today, we will take a look at the financial implications that come with marriage – one of life’s bigger steps that can greatly impact your life and your finances. Going into your marriage with your eyes wide open can pave the way for smooth financial conversations down the road and, even better, ensure that you and your partner are on the same page when it comes to financial planning.
Building Joint Goals
As a unit, your financial goals may change. It’s important to discuss financial goals with your partner and then together with your financial planner so that any current financial plans can be updated. Have your short-term goals changed with marriage? Are you and your spouse on the same page for your long-term aspirations? The answers to these questions could impact the makeup of your financial and investment plans and a good financial planning partner can help structure your plan accordingly.
Consolidating Assets
One big topic to consider when getting married is how you will or will not consolidate assets after marriage. Part of this decision is dictated by law and some will be personal choice. A financial manager can help you navigate the law of the land and assist you set up your assets appropriately to update your accounts and best optimize your new portfolio for your new goals.
Taxes
A possible big change after marriage will come during tax season. As a newly formed financial unit, in addition to tax laws to consider, your situation could include changes such as addition income, assets, and deductions, all of which will have an impact to your tax situation.
Retirement and Benefits
One upside to legal marriage is that spouses can transfer benefits to one another (such as Medicare, disability, and veteran’s benefits) and can also often claim survivor benefits upon one another’s deaths. These benefits can be difficult to navigate and may not make sense if there are penalties or other requirements. Be sure to consult your financial planner for assistance when considering making changes to your benefits structure.
Estate Planning
Estate planning is another important area to consider when getting married as your plans may change with the addition of another person. Estate planning includes planning for what happens to your assets when you pass away or become incapacitated and can no longer make decisions, developing a strategy to minimize taxes for your heirs, and appointing guardians for your children. You will want to speak to an estate planning attorney to make the appropriate updates to your plan to include your spouse as well as speaking to your spouse about their needs and goals for estate planning.
Because a new marriage requires the melding of so many different aspects of life, there are also many opportunities for awkwardness or disagreements. Bringing in a financial planner to help you navigate these waters can help to streamline the process and make it less personal for all parties involved. As with all of life’s big steps, building a plan that grows with you only helps make you more prepared for the changes ahead!