Cashay logo

Empowering your money

How to deal with money & finances in marriage

At a glance:

As money is a big part of your union, it pays to learn the financial implications of saying "I do."

Marriage confers a number of advantages that help to cement it as a social institution. Some of these differ according to the state you live in.

A bride and groom take part in a photo shoot under cherry blossom trees. (Photo: ANDREW CABALLERO-REYNOLDS/AFP via Getty Images)
A bride and groom take part in a photo shoot under cherry blossom trees. (Photo: ANDREW CABALLERO-REYNOLDS/AFP via Getty Images)

Financial benefits of being married

Being joined in marriage entitles you to many financial benefits.

Taxes

You can file joint income tax returns, though this is not a requirement of law. Filing jointly might reduce your tax, depending on the deductions and credits you qualify for.

The new 2018 tax law changed the tax brackets such that the married filing jointly income thresholds are now double the single thresholds for all but the two highest tax brackets.

That means that the "marriage penalty" that many couples experienced when the thresholds were not aligned so precisely is largely gone; it now only occurs in the two top tax brackets, in which combined income is greater than $400,000.

Benefits

A great advantage of being married is the ability to share in benefits that your spouse receives. In turn, he or she can share in yours.

You can receive benefits from Social Security, Medicare, and disability for being a spouse. You can also get public assistance benefits in some cases. As a married person, you can get various military and veterans' benefits—such as medical and education benefits—for spouses. Of course, insurance benefits from your spouse's employer are available to you as well, and you can qualify for family rates for all kinds of insurance.

If your spouse dies, you can receive his or her retirement plan benefits and any wages or workers' compensation. These are on top of Social Security and Medicare benefits that your spouse was receiving.

Employees whose spouses need care during an illness can qualify for family leave for a time. Should your spouse pass away, you can qualify for bereavement leave as well.

The family that works together …

Going into business? Why not create a family partnership so you can pool resources together? Assuming you can survive working with family members, the family partnership lets you divide business income among the participating members.

If you divorce

If you divorce, you are entitled to equitable division of property acquired during the marriage. You are not entitled to this benefit if you are unmarried, unless you have drawn up a specific contract for it. You can also get child support and spousal support as well as custody and visitation.

Some legal benefits of being married

As a rule, there are many discounts and incentives that only married couples can qualify for. For example, a husband or wife can automatically renew a lease signed by his or her spouse. There may also be benefits for education, such as tuition discounts.

If your spouse is the victim of a crime, you may qualify for crime victims' recovery benefits.

Medical and estate planning benefits of being married

Married people benefit in many ways from estate planning laws and medical-related issues.

Inheriting property

As a married person, you are entitled by state law to inherit a part of your spouse's estate after he or she dies. The property given to you by inheritance is exempted from estate taxes.

Gifts given to you by your spouse while you are both alive are also exempt from gift taxes, which are otherwise levied on amounts above a certain amount each year.

You also benefit from various trusts that only married couples can enjoy. These include marital deduction trusts and QTIP trusts.

Conservatorships

If a conservator needs to be appointed for your spouse in order to make financial or medical decisions for him or her, you get first consideration. You may make medical decisions for your spouse in the event he or she becomes incapacitated. Upon your spouse's death, you may make final arrangements for burial and funeral.

Financial responsibilities of marriage

Getting married confers many financial benefits that make it attractive as a cultural institution. These benefits are made possible in part by the various financial responsibilities that married people must agree to when they join in legal union.

Examples of responsibilities

Financial responsibilities vary from state to state. Generally, spouses can share in the property that is acquired during the marriage, and they can share in the income as well (depending on the state they live in). Spousal income and assets are counted when determining need for government assistance, such as education loans, veteran's medical benefits, housing loans for veterans, and housing assistance.

Common responsibilities include providing financial support for any children produced by the marriage. Spouses are liable for many other family expenses, too.

If divorcing …

In the event of divorce, you may be financially responsible for your spouse. You are entitled to equitable division of property acquired during the marriage. An exception to this is if you draw up a legal agreement beforehand that specifies otherwise.

Should you remarry after a divorce, it is important to remember that you may be ineligible to receive survivor benefits.

Changing beneficiaries on certain accounts requires written consent of your spouse.

What about your debts?

It is important to know how your spouse handles money (it is best to learn that before you tie the knot, actually). If you live in a "community property" state, most debts incurred by your spouse during the marriage are owed by you as well as your spouse—unless the creditor has agreed to treat the debts as your and your spouse's own. In non-community property states, your debts are yours and yours alone. But there is an exception to this—if the debts benefit the marriage as a whole (such as for child care or shelter).

As a general rule, if a creditor is going after one spouse to pay a delinquent debt, the other spouse is co-liable only if the debt was incurred for joint purchases or family-necessary purchases. There are gray areas in this rule, of course, and many states have subtle variations in them.

Time to update

Once the honeymoon is over and it's time to face life again, there are many things you may need to do, depending on your and your spouse's wishes. You might add your spouse to your health insurance plan or vice versa. You might make your spouse a beneficiary of any accounts that involve beneficiaries. These include your retirement plans, your investments, life insurance policies, and savings and checking accounts.

Alternatively, you might open up joint accounts. Some couples prefer them for efficiency's sake, while others like to keep their money separated. Some couples open joint accounts for some uses while keeping separate accounts for other uses, like personal spending.

Do you have a will? You may need to update it to include your spouse. You may also need to update a living will, any trusts, and/or powers of attorney so that your spouse and you are both included.

Summary of what getting married means for your finances

Getting married is a big decision, and it isn't just about making a lifelong commitment to your partner: it is also a legal contract. When you get married, you not only accept rights and benefits but also take on legal and financial obligations.

Whether you are already married or about to, there are some practical things you can do to help you in your money matters.

This content was created in partnership with the Financial Fitness Group, a leading e-learning provider of FINRA compliant financial wellness solutions that help improve financial literacy.

Read more information and tips in our Family section

Read more personal finance information, news, and tips on Cashay

Follow Cashay on Instagram, Twitter, and Facebook