Whether you’re thinking about getting engaged, planning a wedding, or just recently tied the knot, it’s important to understand the financial effects of marriage.
- 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
- It’s important to create wills or other estate planning documents to ensure that their wishes are realized. Surviving spouses do not automatically inherit all assets. In the absence of a will, state laws governing disposition of an estate take effect.
Health Care Decisions
- Many health care professionals will often defer to your spouse for health care decisions when you can’t make them for yourself. This may not always be the case.
- To be sure your spouse has the authority to make these kinds of decisions, you should appoint them as your health care agent (also known as a Healthcare proxy) with a medical power of attorney. Complete a Living Will to document your treatment preferences.
- In addition to having the ability to make important health decisions for your spouse, marriage provides other benefits such as:
- Being able to visit your partner in the intensive care unit of a hospital
- Being eligible to take leave from work when your husband or wife is sick or injured
- Being listed as a beneficiary on your spouse’s health insurance plan
- Marriage is one of the qualifying life events that allow you to change your insurance plan, or add your spouse. Most plans require you to make these changes within 60 days of your walk down the aisle.
- You each keep your current plan; Your spouse joins your plan; or You can join your spouse’s plan
- Things to consider: How will your monthly premiums change? And what will happen to your deductible and possible out-of-pocket costs? If either you or your new spouse have already met your deductible or paid significant out-of-pocket costs in your current plan year, you might not want to start a new plan with new limits, especially if you’re anticipating additional health care expenditures.
How Marriage Impacts Your Debt / Liability
- If your spouse declares bankruptcy, cheats on your tax return, hurts someone in a car accident or a bar fight, or loses a lawsuit, your joint assets could be at risk. And if he or she racks up certain kinds of debt, creditors might be able to come after you to pay it off.
- After marriage, you have the option to file joint or separate tax returns. To determine whether you’re eligible to file jointly, you must be married before December 31 of the tax year. If your wedding is not until the following January, you still qualify for single tax filing.
- Filing a joint return has several benefits: deductions & borrowing personal tax credits to lower the tax bracket of a partner.
- Couples filing jointly will generally be in a lower tax bracket than single filers, even if only one spouse is bringing in income. As a bonus, the IRS lets couples take a standard deduction that’s twice as high as the single-filer deduction.
- Married couples can also avoid paying gift and estate taxes. If someone gives you money or leaves you a portion of their estate, you have to pay taxes on it (as it’s considered income). However, married couples are often exempt from these laws.
- If a spouse passes away and leaves money and other assets to their surviving spouse, the surviving spouse generally does not have to pay estate and gift tax on those gifts
- Home insurers might use marital status as a factor in determining your rate, or they might just offer a flat discount, for example 5% off, when you get married
Update and review your information on:
- Social security card
- Driver’s License
- Bank accounts
- Investment accounts
- Credit cards
- Insurance policies
- Voter registration
- Employer payroll
- Passport/ travel information
- Tax filing status
Update beneficiaries on:
- Life insurance