Financial Decisions Couples Face

Last week I wrote about couples managing their money. But as a couple begins to make financial decisions jointly they will confront some other important financial transactions. Here are a few:

Consider Joint Credit Carefully:

Couples almost always bring their own credit cards into the relationship, with each partner having a collection of their own. But getting married does obligate each partner for the others debts. But do be aware of the legal term "joint and several liability" when opening joint credit accounts. If your partner racks up loads of debt and skips out, you will be legally required to pay the entire amount owed on joint credit accounts.

If there are a lot of credit cards between you, then take an inventory, consolidate and close out unnecessary cards and accounts. It's a good idea to keep one credit card in a partner's maiden name to avoid the hassle of reestablishing credit later on.

Joint or Separate Tax returns:

Filing Married is required beginning for the first year in which the couple is married. While it is most common for married couples to file Joint income tax returns, they can chose to file their returns separately.

Reasons to file separately may include possible tax savings where one partner has their own deductible expenses for property or medical expenses that are significant relative to their own income. This may allow one spouse to claim deductions that are otherwise disallowed when filing jointly.

Another good reason to file separate income tax returns is that you suspect that your spouse is less than forthcoming in reporting their income and/or deductions. If you sign a joint tax return and enjoy a lavish lifestyle that is enhanced by the financial gains achieved by the other spouse's fraudulent tax maneuvers, don't think you can play the innocent spouse card when the IRS comes calling. Choosing the "Married - Separate" tax filing status is the best way to protect you from a tax-cheating partner's misstatements and errors. If this is your concern, perhaps you should reconsider your marriage.

Changing Your Name:

If you do decide to take the family name of your partner you will need to notify Social Security, your motor vehicle authority (drivers license, title and registrations), financial institutions (banks, mutual funds, insurances, brokerages, etc) and your get updated citizenship documents (passports and visas). For this reason alone, many women find it more convenient to keep their maiden name.

Update Property Insurance:

Some couples come away from their engagement or wedding with valuable gifts of property. Whether you rent or own your home, you'll want to get a personal articles rider for valuable items such as your engagement ring and the silver table settings you received as wedding gifts. Lose your diamond down the sink drain washing the dishes and you'll be glad it's insured.

Change Employee Benefits:

Getting married is a qualifying "change in family status" which allows you to make new elections under employer provided Health and Life Insurance benefit plans. If both of you have employer provided coverage, use this opportunity to change your benefit elections to select the coverage that best meets both of your needs. Also consider how much life insurance befits are needed to support a partner who is financially dependant on the other.

Get Wills:

If you are expecting children or there is property owned separately get a Will or update an existing one if you have not done this recently. Also update the beneficiary designations on retirement accounts, employer provided benefits, and life insurance policies. These designations will supersede whatever is stated in your Will, so do not let this go unattended. It's also a good idea to have a Living Will and Designation of Health Care Agent to clarify your intentions for final care and the persons to make these decisions.

Ray Martin

View all articles by Ray Martin on CBS MoneyWatch»
Ray Martin has been a practicing financial advisor since 1986, providing financial guidance and advice to individuals. He has appeared regularly as a contributor on the CBS Early Show, CBS NewsPath, as a columnist on CBS Moneywatch.com and on NBC-TV's morning newscast TODAY. He has also appeared on the Oprah Winfrey Show and is the author of two books.

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