Getting Married: Tax and Investment Issues to Consider

With the ever-changing landscape of taxes, it is growing increasingly difficult to understand how legislation affects clients and could possibly impact their financial future. As a leader in the financial services industry for over 30 years, we get it. That’s why HD Vest Financial Services® is constantly seeking ways to share the latest knowledge we acquire with you. We’ve created the Taxes & Investments: Timely and Timeless Strategies Series to share timely information and provide our Advisors and their clients with practical information and ideas they can build on.

Getting married is a very exciting time in an individuals’ life. There are many details to plan: ceremony location, flowers, reception and more but one important detail that should not be overlooked is how your joint finances will work. Having an open and honest conversation with your partner is a must. When you get married you are committing to share a lifetime with your partner, which usually means sharing all responsibilities, including finances. Without a shared financial vision, there could be unnecessary stress on your relationship.

There are several financial topics to work through when you get married:

• Create a Budget: Merging two households requires some planning from the start. Have a conversation about your current budgets and create a plan to prudently combine your monthly household spending and savings.
• Examine Current Debt: According to TheKnot.com, the average cost of a wedding in 2013 was $29,858 excluding the honeymoon1. With the skyrocketing costs of the average wedding, it is important to have an open, honest conversation about your current financial situation. If one of you has a large amount of debt already, it may be wise to watch wedding spending more closely. It is also important to be sure you have a shared vision of how you both plan to tackle any current debt either of you may have.
• Create Estate Planning and Legal Documents:When you get married it is important to put into place or update the beneficiary on the five basic estate planning documents: last will and testament, durable power of attorney, medical power of attorney, living will, and revocable living trust. Two other legal documents may be prudent if this is a subsequent marriage: a prenuptial agreement or a trust to hold assets intended to go to children from a prior relationship.
• Review Current Life Insurance Coverage:When you get married, review your current life insurance policies to be sure that you have enough insurance on each spouse and the right type of insurance for your needs and goals. Also, make sure you update the beneficiary on any existing policy if necessary.
• Examine Health Insurance Options:Take a look at whose employer offers the best health care plan. Consider coverage as well as cost.
• Review Other Insurance Coverage:Some types of policies provide discounts when an individual gets married. Also, check to be sure the correct beneficiary is listed on these policies.
• Evaluate Current Account Titling and Beneficiaries:When you get married, conduct a thorough review of all financial accounts to check for proper account titling and beneficiaries. Depending on how you plan to manage finances going forward, you may want to change accounts to a joint registration, and depending on the intent of the accounts, you may also want to make sure your spouse is listed as the primary beneficiary.
• Evaluate Tax Withholdings:Contact your trusted tax advisor to evaluate the appropriate amount to withhold from your paychecks going forward. You may be giving the Uncle Sam an unintended tax-free loan.
• Review IRA Contributions:If one spouse makes more than the phase-out limits for IRA contributions, it may affect both spouses’ ability to make IRA contributions.
• Update your Employer 401k Beneficiary Forms:Check in with your employer to reflect any changes in beneficiary based on your new marital status.
• Consider Joint Risk Tolerance and Talk About Your Goals:Consider visiting your HD Vest Advisor to review your risk tolerance once married. Depending on how you and your spouse feel about risk, you may want to adjust the way your accounts are invested. It is important to talk with your spouse and see what your respective financial goals are. Having a clear view of what you both hope to accomplish will help to direct how much you should save as a couple and where to invest.
• Share Account Information:Make sure your spouse knows where all the accounts are and knows how to access them. With some couples, one spouse tends to take the lead on all things financial. This means that the other spouse sometimes doesn’t have a clear idea on everything they have or how to access it. In today’s digital age it is increasingly common to not receive paper statements, so it may be more difficult to find accounts should something happen to the spouse taking charge.

Covering these topics when you get married will help to create a clear picture of where both spouses stand financially and reduce potential stress. Just like couples use a wedding planner to help orchestrate their big day, it is a good idea to talk to your trusted HD Vest Advisor to help
orchestrate the merging of your financial lives. Starting your life together off on the right financial foot can make all the difference on your journey together.