Getting Married: How to Tie the Financial Knot
From Citi Personal Wealth Management
You and your future spouse are not only romantic partners—you're financial partners, too. As a result, you'll need to address several questions. How far will you go in merging your finances? Should you have a joint checking account, separate accounts or both? Who will pay the bills? If you're both working, whose employer-provided health plan should you use? Perhaps most important, when it comes to spending and taking on debt, do you have similar attitudes-and, if not, what's a sensible compromise?
As you tackle the financial issues that come with marriage, here are some steps you may want to take:
• Disclose all.To get off on the right foot, you should probably each disclose everything about your finances, including portfolio balances and debts. For example, if one or both of you has a lot of debt, tell your partner how much it is and how you plan to pay it off or reduce it to a manageable level. If there is a substantial difference in your net worth or this is a second marriage for one or both of you, you may want to consider a prenuptial agreement.
• Decide who pays the bills. To cover the utilities, rent or mortgage, groceries, and other shared expenses, you might set up a joint checking account. But each of you may also want your own bank account and credit cards that you can use for your own spending. But be careful about applying for too many credit cards: Depending on how you manage your debt, that could hurt your credit score.
• Save on benefits. If you're both working, you may be able to save money by eliminating any duplication of health care benefits. Just figure out who has the best coverage for the cost involved.
• Change beneficiary designations. While you're dealing with employee benefits, consider whether you ought to change the beneficiaries listed on your company-paid life insurance and on your employer's retirement plan, as well as on any Individual Retirement Accounts and any individual life insurance policies. Remember, these beneficiary designations—and not your will—typically determine who inherits these types of assets. Also, if either of you has a new name, you'll need to change employee records and contact investment companies, banks and Social Security. Don't forget to change the name on your driver's license, passport and credit cards, too.
• Rethink your life insurance. You may need insurance beyond what your employer provides—especially if one spouse is coming to the marriage with dependents, you intend to have children quickly, or you plan to take out a mortgage to buy a home together.
• Write wills. If this is a first marriage and you have relatively modest assets, simple wills may suffice. If you have greater assets or there are children from earlier marriages, you may need to engage in more sophisticated estate planning.
• Watch the tax bill. If you both work, you could be unpleasantly surprised to find that your income tax bill may be higher as a married couple than if you had stayed single, particularly if you have above-average incomes. The good news is that the standard deduction for married couples has been set at twice the amount for single taxpayers, and the 15 percent tax rate for married couples covers double the income of single filers. If you think you might pay more in taxes as a married couple, consider increasing your payroll withholding.
- This Communication is prepared by Citi Private Bank (CPB), a business of Citigroup,
Citi). Not all products and services are provided by all affiliates or are available at all locations. CPB personnel are not research analysts, and the information in this Communication is not intended to constitute
research,as that term is defined by applicable regulations. to footnote reference 1
, which provides its clients access to a broad array of products and services available throughout Citigroup, its bank and non-bank affiliates worldwide (collectively,
The information provided here is for informational purposes only. It is not an offer to buy or sell any of the securities, insurance products, investments or other products named.
This material is derived from sources believed to be reliable, but its accuracy and the opinions based thereon are not guaranteed.
Since life insurance is medically underwritten you should not cancel your current policy until your new policy is in force. Your actual premiums may vary from any initial quotation you receive. A change to your current policy may incur charges, fees and costs. A new policy may require a medical exam. Surrender charges may be imposed and the period of time for which the surrender charges apply may increase with a new policy. You should consult with your own tax advisors regarding your potential tax liability on surrenders.
Citigroup Inc. and its affiliates do not provide tax or legal advice. To the extent that this material or any attachment concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Any such taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor.
CGMI), member SIPC
Insurance products are offered through Citigroup Life Agency LLC (
CLA). In California, CLA does business as Citigroup Life Insurance Agency, LLC (license number 0G56746). CGMI, CLA and Citibank, , are affiliated companies under the common control of Citigroup Citi, Citi and Arc Design and other marks used herein are service marks of Citigroup Inc. or its affiliates, used and registered throughout the world.