Marriage affects your finances in many ways, including your ability to build wealth, plan your estate and capitalize on tax benefits. Here are some considerations to keep in mind if you are thinking of getting married or have recently tied the knot.
- Building wealth: If it is the case that both spouses are working, avoid the temptation to double your lifestyle (typically meaning a house of double the value) or you will not realize the benefits of two incomes. Two salaries can be a considerable benefit in building long-term wealth. For example, if both of you have access to employer-sponsored retirement plans, your joint contributions are double the individual maximums ($17,500 for 2013). Similarly, a working couple may be able to pay a mortgage more easily than a single person can, which may make it possible for a couple to apply a portion of their combined paychecks for family savings or investments.
- Estate planning: Married couples may transfer real estate and personal property to a surviving spouse with no federal gift or estate tax consequences until the survivor dies. But surviving spouses do not automatically inherit all assets. Couples who desire to structure their estates in such a way that each spouse is the sole beneficiary of the other need to create wills or other estate planning documents to ensure that their wishes are realized. In the absence of a will, state laws governing disposition of an estate take effect.
- Tax planning: When filing federal income taxes, filing jointly typically results in lower tax payments when compared with filing separately.
The opportunity to go through life with a loving partner may be the greatest benefit of a successful marriage. That said, there are financial and legal benefits that you may want to explore with your beloved.