When You Say "I Do"!
You are about to get married (or maybe just did)! Chances are, what's on your mind is the invitation list, thank you notes, flowers, colors and all things wedding, while pondering the financial implications of your nuptials is not at the top of your list (if at all).
But giving these issues some thought now will greatly benefit both you and your spouse, and ultimately could prevent much undue hardship or conflict later.
Here are eight basic issues to consider that should be discussed with your future (or current) spouse and ultimately acted upon:
1. Account titling and beneficiary designations. Review all your financial accounts to make sure they are properly titled and to decide whether accounts should be jointly registered or remain separately owned. 2. Aim for full disclosure. Spouses need to know the details all the investment and bank accounts and how to access them, particularly if they are paperless since that makes them less visible. Without this knowledge, if something happens to either of you where you are incapable of handling these accounts, your spouse will have no way of taking care of your affairs.
3. Estate plans and documents. If you have planning documents already in place, you should establish or update the beneficiary on your last will and testament, durable power of attorney, medical power of attorney, living will, and/or revocable living trust. The same is true for any executor or trustee designations that need revision. If you don't have such planning documents in place, there is no better time than now to get this done!
Another thing to consider: whether to establish a prenuptial agreement or a trust to hold assets intended to go to any children from a prior relationship.
4. Insurance coverage. You should assess whether current life insurance protection is adequate, and that beneficiary designations are appropriate, making any necessary changes. Also up for review: health benefits, disability coverage and the full suite of property casualty policies.
5. Balance sheet review. It's overwhelmingly tempting to get caught up in the joy of this season of life and "spare no expense" on weddings and honeymoons. But there is no time like the beginning of a union of two people to take stock of current debt burdens and make tough decisions about what "affordable" means to you as a couple and future family.
6. Create a budget. After the balance sheet review comes the prospective combined income statement and the dreaded "B" word: budget! Starting out on the right foot with spending, saving, and investing goals (with a mutually agreeable exposure to investment risk) can establish a pattern that will lead to achieving financial goals throughout the marriage.
7. Tax withholding. Making any needed adjustments to withholding ensures that you don't wind up with a huge bill on April 15 or conversely, having made a large interest-free loan to Uncle Sam.
8. Retirement savings. If one spouse makes more than the phase-out limits for IRA contributions, it may affect both spouses' ability to make IRA contributions. More broadly, the question is, are you taking full advantage of 401(k) matching contributions and other savings opportunities?
Studies consistently show that finances and money are one of the top, if not the top, sources of conflict in marriage. You are not immune. Taking these steps gets you off to a great start and establishes a solid footing that will help you avoid unnecessary stress and conflict, hopefully lending to a lifetime of wedded bliss!
