News

Jul 28, 2023

Jill On Money: Marital money

After attending just one wedding over the past five years, I have now received

After attending just one wedding over the past five years, I have now received four "save the date" nuptial notices for 2024. It seems that surviving a once-in-a-century pandemic seems to have cured many of their disdain for the celebration of unions, which my father once said "saps your savings in exchange for a dirty cake knife!"

Instead of disputing dad's wedding opinions, let me enter into the record my opinion: Yes, weddings are usually pretty wasteful events (the Knot found that in 2022, couples spent about $5,000 on rings and another $30,000 on the main event), but if they don't put couples or their families into financial peril, who am I to be a buzz-kill?

In addition to the deep dive on all that surrounds a wedding (for the sixth year in a row, the most popular first dance song was Perfect by Ed Sheeran), one statistic jumped out from the Knot's survey: the vast majority (90 percent of Gen Z (ages 18-25) and 86% of Millennials (26-41) of those who were planning an event spoke about future finances before getting engaged. Considering that marriages are legal unions that unite a couple's financial lives, this fact is very good news.

I have long advocated that couples share financial information. The reason is both practical (each person needs to know what's going on, just in case…) and relational, because when one person controls the money, there can be a power dynamic that gets things out of whack.

The key facts that each should know about the other are the total amount of outstanding debt, the amount of money in savings or investment accounts, retirement holdings, and credit scores. Ideally, the exchange of information should occur long before uttering wedding vows.

As couples look ahead at their joint lives, many wonder about combining their accounts. I am agnostic on this point — if you like maintaining separate bank and investment accounts, that's perfectly fine, especially for those couples who have maintained their individual accounts for a long time.

However, separation does not mean secret. Everything must be disclosed, and each partner should know how to access the other's account, in the event of an emergency.

Similarly, you should discuss who will be responsible for bill paying and share whatever system is in effect, including relevant websites, passwords, automatic payments, and any other information that could be useful, in the event that one partner finds themselves flying solo.

(As a note, separate is always better when it comes to credit cards. There is no reason to have a joint credit card account, because one partner's financial missteps can do great harm to the other.)

The third rail of marriage and money is the conversation about a pre-nuptial agreement ("prenup"). These contracts contemplate how a couple would split up their financial lives in the event that the relationship does not work out. (About 40-50% of first marriages do not make it and second and third ones do even worse.)

Of course, it is difficult to have these conversations, but couples with extenuating circumstances, like children from previous marriages; owners of closely held businesses; and those who have a large disparity in wealth may want to consult with a matrimonial attorney to discuss ways to navigate this thorny topic.

Finally, a marriage is one of those life events that allows me to nag everyone about estate planning.

As soon as possible, couples should draft a will, a durable power of attorney and a health care proxy. Part of the estate planning process should include a review of all beneficiary designations on retirement accounts and life insurance policies, because nobody wants to erroneously leave a big retirement account to an ex!

Jill Schlesinger, CFP, is a CBS News business analyst. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at [email protected]. Check her website at www.jillonmoney.com.

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