Marriage and Money (3 ways it affects your finances)

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Today let's review 3 ways marriage affects your finances.

Knowing how your finances are affected can help you:

• Plan for the future.

• Avoid big surprises.

• Know what to expect.

Unfortunately, money can be an uncomfortable topic.

It's Awkward

Talking to a fiancé or spouse about money can lead to:

• Arguments.

• Awkward silence.

• Avoidance of the topic.

One solution:

Joking aside, here's 3 ways marriage affects your money:

1. Your Assets

When saying "I do" you commit yourself to a spouse.

You also commit yourself to several state laws.

The government says who owns what in your marriage.

These laws also say what happens if a spouse passes away or decides to divorce.

This topic is viewed in 2 ways:

Way 1: Common Law Property

If your name is on an asset, you own it.

For example:

• An automobile.

• A savings account.

• A retirement account.

You can leave it to anyone you want upon your passing.

Most states in the US follow these rules.

Common law property views your assets as your assets even when you're married.

Way 2: Community Property Law

Assets you own before marriage are your assets.

But once you're married...

Any new assets you own are split 50/50 with your spouse.

9 states in the US view your assets this way:

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2. Your Debts

Your debts are viewed just like your assets.

Common Law Property

If your name is on the debt, it's just your debt.

For example:

• A car loan.

• A credit card.

• A personal loan.

Common law property views your debts as your debts even when you're married.

Community Property Law

Any debts you have before marriage are considered your debts.

But once you're married...

Any new debts you get are owned 50/50 with your spouse.

For Example

If you're married in California.

And your spouse decides to finance a $120,000 Mercedes.

Even if they're the only one on the loan, it's considered your loan too.

California follows community property law.

If you live in New York it wouldn't be considered your loan.

Because New York follows common law property.

So, which is better?

Common law property.

(41 states follow this)

OR

Community property law.

(9 states follow this)

It's not a matter of better or worse it's about knowing which laws apply in your area.

Knowing what to expect.

And planning for it.

3. Your Taxes

Marriage has many perks.

Married couples usually file their taxes together.

But, it's not always best.

Filing separately is sometimes a better move.

Reasons a couple may file separately include:

• So a spouse can qualify for a lower student loan payment.

• So a spouse can take higher medical write-offs.

• So each spouse is in a lower tax bracket.

Some tax deductions and tax credits are better when you file separately.

Some are better when you file together.

So, how should you file?

Here's a good way to decide:

Prepare your tax return both ways to see which way saves you the most money.

That can be a lot of work.

The easier way...

Have a CPA do your taxes and ask them to check.

They can easily check with their tax software.

Conclusion

Most people don't want the government involved in their marriage.

So they take control by:

• Creating a will.

• Creating a trust.

• Creating a prenup.

These documents give you more say over your finances.

Live for today.

But prepare for tomorrow.

See you next week.