Life Events
Financial Guides
Getting Married (or Divorced): Some Financial
Guidelines
What are the financial implications of marriage (and of divorce and remarriage)? Those who have recently changed their marital status or who are planning such a change may have important financial and legal decisions to make. These decisions might deal with property ownership, providing for children's welfare, postmortem planning, and day-to-day finances.
Table of Contents
- How To Prepare Financially For A First Marriage
- How To Prepare Financially For A Divorce
- How To Prepare Financially For Remarriage
- Government and Non-Profit Agencies
This Financial Guide discusses financial considerations related to a change in marital status. And, because divorce is sometimes the flip side of a marriage--and often the bridge between marriage and remarriage--it is covered here as well.
Under a joint IRS and U.S. Department of the Treasury ruling issued in 2013, same-sex couples, legally married in jurisdictions that recognize their marriages, are treated as married for federal tax purposes, including income and gift and estate taxes. The ruling applies regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage or a jurisdiction that does not recognize same-sex marriage.
In addition, the ruling applies to all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA and claiming the earned income tax credit or child tax credit.
Any same-sex marriage legally entered into in one of the 50 states, the District of Columbia, a U.S. territory or a foreign country is covered by the ruling. However, the ruling does not apply to registered domestic partnerships, civil unions or similar formal relationships recognized under state law.
This guide will also briefly touch on legal issues involved; however, variations in state law make it nearly impossible to discuss in any detail the legal ramifications that a change in marital status presents.
Related Guide: For a discussion of the impact of the death of a spouse, please see the Financial Guide: DEATH OF A SPOUSE: Financial Steps You Should Take
Financial Guides
How To Prepare Financially For A First Marriage
For the young, newly married couple, areas of financial concern primarily include: (1) life insurance, (2) form of property ownership, and (3) money management.
Related Guide: Please see the Financial Guide: LIFE INSURANCE: How Much & What Kind To Buy
Financial Guides
How To Prepare Financially For A Divorce
If you are considering divorce, it is vital to plan for the dissolution of the financial partnership in your marriage. Such dissolution involves dividing financial assets accumulated during the marriage. Further, if children are involved, future financial support for the custodial parent must be planned for. While it may not be at the top of your to-do list, taking time to prepare financially during divorce pays off in the long run.
Take Stock Of Your Situation
Assessing your financial situation helps you in two ways:
- It will provide you with preliminary information for an eventual division of the property.
- It will help you to plan how debts incurred during the marriage are to be paid off. Although the best way to deal with joint debt (such as credit card debt) is to pay it off before the divorce, this strategy is often impossible so compiling a list of your debts will help you to come to some agreement as to how they will be paid off.
- To take stock of your situation start by preparing an inventory of your financial assets:
- The current balance in all bank accounts;
- The value of any brokerage accounts;
- The value of investments, including any IRAs;
- Your residence(s);
- Your autos; and
- Your valuable antiques, jewelry, luxury items, collections, and furnishings.
- Make sure you have copies of the past two or three years' tax returns. These will come in handy later.
- Make sure you know the exact amounts of salary and other income earned by both yourself and your spouse.
- Find the papers relating to insurance-life, health, auto, and homeowner's-and pension or other retirement benefits.
- List all debts you both owe, separately or jointly. Include auto loans, mortgage, credit card debt, and any other liabilities.
If you are a spouse who has not worked outside the home lately, be sure to open a separate bank account in your own name and apply for a credit card in your own name. These measures will help you to establish credit after the divorce.
Related Guide:
For a system that makes it easy to organize and locate your records, please see the Financial Guide: DOCUMENT LOCATOR SYSTEM: A Handy Aid For Keeping Track Of Your Records
Estimate Your Post-Divorce Living Expenses
Assessing your financial situation helps you in two ways:
- It will provide you with preliminary information for an eventual division of the property.
- It will help you to plan how debts incurred during the marriage are to be paid off. Although the best way to deal with joint debt (such as credit card debt) is to pay it off before the divorce, this strategy is often impossible so compiling a list of your debts will help you to come to some agreement as to how they will be paid off.
- To take stock of your situation start by preparing an inventory of your financial assets:
- The current balance in all bank accounts;
- The value of any brokerage accounts;
- The value of investments, including any IRAs;
- Your residence(s);
- Your autos; and
- Your valuable antiques, jewelry, luxury items, collections, and furnishings.
- Make sure you have copies of the past two or three years' tax returns. These will come in handy later.
- Make sure you know the exact amounts of salary and other income earned by both yourself and your spouse.
- Find the papers relating to insurance-life, health, auto, and homeowner's-and pension or other retirement benefits.
- List all debts you both owe, separately or jointly. Include auto loans, mortgage, credit card debt, and any other liabilities.
If you are a spouse who has not worked outside the home lately, be sure to open a separate bank account in your own name and apply for a credit card in your own name. These measures will help you to establish credit after the divorce.
Related Guide:
For a system that makes it easy to organize and locate your records, please see the Financial Guide: DOCUMENT LOCATOR SYSTEM: A Handy Aid For Keeping Track Of Your Records
Cancel All Joint Accounts
Assessing your financial situation helps you in two ways:
- It will provide you with preliminary information for an eventual division of the property.
- It will help you to plan how debts incurred during the marriage are to be paid off. Although the best way to deal with joint debt (such as credit card debt) is to pay it off before the divorce, this strategy is often impossible so compiling a list of your debts will help you to come to some agreement as to how they will be paid off.
- To take stock of your situation start by preparing an inventory of your financial assets:
- The current balance in all bank accounts;
- The value of any brokerage accounts;
- The value of investments, including any IRAs;
- Your residence(s);
- Your autos; and
- Your valuable antiques, jewelry, luxury items, collections, and furnishings.
- Make sure you have copies of the past two or three years' tax returns. These will come in handy later.
- Make sure you know the exact amounts of salary and other income earned by both yourself and your spouse.
- Find the papers relating to insurance-life, health, auto, and homeowner's-and pension or other retirement benefits.
- List all debts you both owe, separately or jointly. Include auto loans, mortgage, credit card debt, and any other liabilities.
If you are a spouse who has not worked outside the home lately, be sure to open a separate bank account in your own name and apply for a credit card in your own name. These measures will help you to establish credit after the divorce.
Related Guide:
For a system that makes it easy to organize and locate your records, please see the Financial Guide: DOCUMENT LOCATOR SYSTEM: A Handy Aid For Keeping Track Of Your Records
If Your Spouse's Poor Credit Affects You
Assessing your financial situation helps you in two ways:
- It will provide you with preliminary information for an eventual division of the property.
- It will help you to plan how debts incurred during the marriage are to be paid off. Although the best way to deal with joint debt (such as credit card debt) is to pay it off before the divorce, this strategy is often impossible so compiling a list of your debts will help you to come to some agreement as to how they will be paid off.
- To take stock of your situation start by preparing an inventory of your financial assets:
- The current balance in all bank accounts;
- The value of any brokerage accounts;
- The value of investments, including any IRAs;
- Your residence(s);
- Your autos; and
- Your valuable antiques, jewelry, luxury items, collections, and furnishings.
- Make sure you have copies of the past two or three years' tax returns. These will come in handy later.
- Make sure you know the exact amounts of salary and other income earned by both yourself and your spouse.
- Find the papers relating to insurance-life, health, auto, and homeowner's-and pension or other retirement benefits.
- List all debts you both owe, separately or jointly. Include auto loans, mortgage, credit card debt, and any other liabilities.
If you are a spouse who has not worked outside the home lately, be sure to open a separate bank account in your own name and apply for a credit card in your own name. These measures will help you to establish credit after the divorce.
Related Guide:
For a system that makes it easy to organize and locate your records, please see the Financial Guide: DOCUMENT LOCATOR SYSTEM: A Handy Aid For Keeping Track Of Your Records
For Women: Maintain Your Own Credit Before You Need It
Assessing your financial situation helps you in two ways:
- It will provide you with preliminary information for an eventual division of the property.
- It will help you to plan how debts incurred during the marriage are to be paid off. Although the best way to deal with joint debt (such as credit card debt) is to pay it off before the divorce, this strategy is often impossible so compiling a list of your debts will help you to come to some agreement as to how they will be paid off.
- To take stock of your situation start by preparing an inventory of your financial assets:
- The current balance in all bank accounts;
- The value of any brokerage accounts;
- The value of investments, including any IRAs;
- Your residence(s);
- Your autos; and
- Your valuable antiques, jewelry, luxury items, collections, and furnishings.
- Make sure you have copies of the past two or three years' tax returns. These will come in handy later.
- Make sure you know the exact amounts of salary and other income earned by both yourself and your spouse.
- Find the papers relating to insurance-life, health, auto, and homeowner's-and pension or other retirement benefits.
- List all debts you both owe, separately or jointly. Include auto loans, mortgage, credit card debt, and any other liabilities.
If you are a spouse who has not worked outside the home lately, be sure to open a separate bank account in your own name and apply for a credit card in your own name. These measures will help you to establish credit after the divorce.
Related Guide:
For a system that makes it easy to organize and locate your records, please see the Financial Guide: DOCUMENT LOCATOR SYSTEM: A Handy Aid For Keeping Track Of Your Records
Consider the Legal Issues
Assessing your financial situation helps you in two ways:
- It will provide you with preliminary information for an eventual division of the property.
- It will help you to plan how debts incurred during the marriage are to be paid off. Although the best way to deal with joint debt (such as credit card debt) is to pay it off before the divorce, this strategy is often impossible so compiling a list of your debts will help you to come to some agreement as to how they will be paid off.
- To take stock of your situation start by preparing an inventory of your financial assets:
- The current balance in all bank accounts;
- The value of any brokerage accounts;
- The value of investments, including any IRAs;
- Your residence(s);
- Your autos; and
- Your valuable antiques, jewelry, luxury items, collections, and furnishings.
- Make sure you have copies of the past two or three years' tax returns. These will come in handy later.
- Make sure you know the exact amounts of salary and other income earned by both yourself and your spouse.
- Find the papers relating to insurance-life, health, auto, and homeowner's-and pension or other retirement benefits.
- List all debts you both owe, separately or jointly. Include auto loans, mortgage, credit card debt, and any other liabilities.
If you are a spouse who has not worked outside the home lately, be sure to open a separate bank account in your own name and apply for a credit card in your own name. These measures will help you to establish credit after the divorce.
Related Guide:
For a system that makes it easy to organize and locate your records, please see the Financial Guide: DOCUMENT LOCATOR SYSTEM: A Handy Aid For Keeping Track Of Your Records
Division of Property
Assessing your financial situation helps you in two ways:
- It will provide you with preliminary information for an eventual division of the property.
- It will help you to plan how debts incurred during the marriage are to be paid off. Although the best way to deal with joint debt (such as credit card debt) is to pay it off before the divorce, this strategy is often impossible so compiling a list of your debts will help you to come to some agreement as to how they will be paid off.
- To take stock of your situation start by preparing an inventory of your financial assets:
- The current balance in all bank accounts;
- The value of any brokerage accounts;
- The value of investments, including any IRAs;
- Your residence(s);
- Your autos; and
- Your valuable antiques, jewelry, luxury items, collections, and furnishings.
- Make sure you have copies of the past two or three years' tax returns. These will come in handy later.
- Make sure you know the exact amounts of salary and other income earned by both yourself and your spouse.
- Find the papers relating to insurance-life, health, auto, and homeowner's-and pension or other retirement benefits.
- List all debts you both owe, separately or jointly. Include auto loans, mortgage, credit card debt, and any other liabilities.
If you are a spouse who has not worked outside the home lately, be sure to open a separate bank account in your own name and apply for a credit card in your own name. These measures will help you to establish credit after the divorce.
Related Guide:
For a system that makes it easy to organize and locate your records, please see the Financial Guide: DOCUMENT LOCATOR SYSTEM: A Handy Aid For Keeping Track Of Your Records
Debt Relief with Dignity
How To Prepare Financially For
Remarriage
When considering remarriage, it is important to plan for the following:
- Whether property acquired before the marriage will be held jointly
- How to provide for children from a previous marriage
- Whether a prenuptial agreement is necessary to accomplish goals related to either of these issues
If either spouse has significant assets, it will be necessary to consult an attorney.
As for the estate planning aspects of providing for children from a previous marriage, trusts and/or life insurance are the vehicles most often used to do this.
Be sure to update your will before you remarry to ensure that your assets will be divided among your heirs after your death in the manner and proportions you desire.
Agencies
Government and Non-Profit Agencies
This Content is for informational purposes only. Nothing contained herein constitutes accounting, tax, financial, investment, legal or other professional advice, and, accordingly, the author and the distributor assume no liability whatsoever in connection with its use. This Content is not an exhaustive explanation of any topic, practice or process. You should seek the advice of a licensed professional before making any accounting, tax, financial, investment or legal decision.
