Financial Changes When You Marry

By Caitlin Kelly | Updated May 28, 2014 AAA

 For couples planning a wedding, it’s easy and fun to focus on the cake, the honeymoon, which flower colors to choose and the number of bridesmaids to include in the ceremony.

Some essential items, though, are often less amusing and more contentious. Couples need to decide whether they need a prenuptial agreement or trust, write a will and change all their documents to reflect their new legal status.

For Zoe Twitt, a 31-year-old fashion designer living in Denver, running her own growing business, shopzoelife.com means – for a time – relying more heavily on her fiancé’s income. Her father, an Australian entrepreneur, gave her money for her business as her wedding gift. She and her fiancé, Brendan Burke, 32, an investment banker, are marrying June 12 in New York City.

“They weren’t difficult conversations,” says Twitt of the frank discussions she and Burke had about how they would handle their finances. “Everything was fairly easy and straightforward. Brendan talks about money all day long!”

As a “creative person” whose income is more “unstable and tenuous,” Twitt is comfortable, for now, knowing that while she will need to rely on his income for a while, she also brings significant savings to the marriage.

 “Zoe is an entrepreneur and just launched a business,” says Burke. “Since we’re funding the business ourselves, her business decisions often have substantial ramifications for our personal financial situation. That makes those decisions much more emotional than me making a spending decision for Headwaters, the company I work for.”

They have not yet made out new wills, but plan to do so soon.

Should You Have a Prenuptial Agreement?

The couple discussed having a prenuptial agreement, says Burke. “We explored it with some family-law attorneys, but ultimately decided against it. We decided that, absent a huge disparity in wealth, a prenup was not necessary.”

For Michael Dwyer, a corporate pilot, and his wife, Janet Donnelly, a financial controller for a pharmaceutical company, mingling their financial affairs and future was made somewhat more complicated by the four young daughters from previous marriages they share between them, ranging in age from 10 to 13. The Long Island, N.Y., couple, who reconnected after meeting 17 years earlier, have been careful to set up individual 529-plan accounts for their daughters’ college educations.

Both say their ex-spouse would become legally and financially responsible for their respective children in case of their death.

The couple “are still working through” the creation of new living wills, health-care proxies and wills; each brought pre-existing documents to the marriage. Dwyer sold his house and the couple renovated hers before his family moved in.

 “We were more focused on getting the kids settled down. Now things are calmer, and we’re dealing with these issues,” says Dwyer.

Get Your Affairs in Order

For Donnelly, getting their affairs in order is “actually very important to me. I like to have things in place should something arise.” Both have 401(k) accounts, separate and joint, and have named beneficiaries for them.

Every married couple “definitely should have wills,” advises Isabel Miranda, an attorney in Bloomfield Hills, N.J., who specializes in trusts and estate planning. She is less persuaded of the need for a prenuptial agreement unless there is a great disparity in assets, in which case, “the family will insist on it. The children of wealthy families understand the family will demand it.”

If one spouse is not from a wealthy background, however, requiring that they sign a prenuptial agreement is problematic, she warns. “Feelings get hurt. They see it as insulting.” In that case, each person must use their own lawyer and submit their finances to full disclosure. “It can be very uncomfortable,” says Miranda. “It’s not a lovey-dovey conversation.”

Leaving assets in a trust offers a compromise, she suggests.

Couples who should consider creating a prenuptial agreement are those who are older, and those who come to the altar with his and her own assets and retirement plans. “Most people who have children from a prior marriage do have prenups,” she says.

Don’t Forget a Health Care Proxy and Living Will

Basic legal changes every married couple must make include giving power of attorney to one another, creating a living will and designating a health care proxy. But making these crucial decisions is often something that couples, certainly younger ones, tend to ignore or put off. “It’s not top of mind,” says Miranda.

The living will is important because it makes clear what your wishes are in case you cannot communicate them to medical staff, and the health care proxy is the person who will make sure those wishes are respected. “If you don’t say what it is you want to happen, the doctors will do everything in their power to keep you alive, even if you don’t want that. Say it! Then your health care proxy is able to fight for your rights,” explains Miranda.

The power of attorney is essential in case one person is incapacitated and can’t communicate. “It’s important if the couple doesn’t have joint accounts,” says Miranda. “The spouse would have no power to transact business on their behalf without this.” It’s also important to make sure someone else has ready access to all these documents in case of emergency so that they can be scanned or faxed if you are out of the state or the country. For more details on what you need, see Do You Have This Crucial Financial Letter?

People worry that seeing a lawyer to create these important documents is complicated and expensive, not mention the fear or distaste about even discussing death, Miranda adds, urging that they persevere. “When you marry, you have a responsibility to your spouse. Don’t you owe them a duty of care?”

“Invest in some legal advice,” she says. “It’s an investment worth making.”

The Bottom Line

Getting married means creating a new family, and a new set of financial and legal commitments. Take time to review your current documents carefully, and invest some time and money in preparing the new ones you need with the help of an attorney.

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