When planning a marriage, the wedding and reception are not the only items to consider! Before tying the knot, couples should determine how their goals and lifestyles will change with the addition of a partner. While marriage is an exciting new phase in a persons life, there will also be a number of items to contemplate and address:
Update registrations for name change – if a spouse decides to take the last name of their partner, all relevant registrations will need to be updated (bank statements, legal documents, deeds, social security, etc.)
Establish an emergency reserve– establish and fund a checking or savings account to provide liquidity and a source of funds to meet unexpected needs
Decide how to title new and existing assets– weigh the benefits (efficiency, transparency) and potential drawbacks (creditor protection) of joint ownership; you may want to consider having each spouse maintain their own account for individual wants and joint accounts for needs, an emergency fund, and perhaps a vacation fund
Create a budget– now that there are two peoples spending habits to consider, it is wise to create a budget to quantify expenses and uncover potential excess cash flow
Review and update retirement plan and life insurance beneficiary designations prior to your marriage, you may have had your parents, siblings, or other family members named as primary beneficiaries of these assets; do not forget to review and update these as out-of-date designations can wreak havoc on an estate plan
Execute updated legal documents– without properly executed Wills, the surviving spouse may only inherit a portion of available probate assets; if there are children from a prior marriage, additional provisions may be needed
Review health insurance coverage – most companies offer family coverage so be sure to compare costs between both of your plans to see if it makes sense to keep your individual coverage or share coverage under one spouses plan
Determine adequate life insurance coverage – proceeds can help provide income replacement for your spouse as well as a source of liquid funds to pay off any outstanding debts you may have had (mortgage, car loans, etc.); if your spouse has federal student loans on which you are not a co-signer, these will be discharged at their death
Consider purchasing or increasing disability coverage – oftentimes, an individuals earning power is their greatest asset; therefore, be sure to protect your ability to pay your bills, support your spouse, and save for retirement
Prepare for a change to your tax liability – it will be important to consider the effect of filing jointly (or separately) on many different items, including itemized deductions, IRA contributions, Net Investment Income Tax, etc.
Effectively manage debt – make sure to prioritize paying down high interest debt
Determine your savings plan– you will need to coordinate retirement plan contributions and other savings going forward; this may increase or decrease depending upon your cash flow and retirement goals
There is obviously a lot to consider when getting married and this is only a basic overview. If you are planning on marrying soon, or are recently married, you may wish to consider having a MASTERPLAN done; this financial plan will take a comprehensive look at your financial situation. Please contact Hefren-Tillotson for further details.