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For Richer or Poorer: Financial and Legal Considerations in Marriage

Last year, the average U.S. wedding cost $32,641 — including engagement rings but excluding honeymoons — according to the 2015 Real Weddings Study published by The Knot, a wedding marketplace and concierge service. That staggering amount represents an increase of more than $5,500 over the past five years.

On average, the couple foots 43% of the wedding bill themselves these days, and their parents pay 56%. The remainder is funded by other friends and relatives. If you or a loved one plans to tie the knot this year, it’s important to establish budget guidelines upfront. By setting limits and sticking to them, you’re setting the tone for a financially responsible future.

Wedding Trends

One reason for increasing wedding costs is personalization, according to The Knot study. Modern couples want to personalize their guests’ experience with themes and ethnic elements, such as bilingual music, signature cocktails, Chinese tea ceremonies, live dancers and jumping the broom ceremonies (an African-American tradition).

Another trend is asking a close friend or relative to officiate. This personal touch can lower costs somewhat — although the average cost of a wedding officiant is only $273.

A surprising development is the recent shift in the wedding season: Summer is no longer the most popular time of the year for weddings. In 2015, only 33% of couples opted to say, “I do,” in June, July or August. The most popular time for nuptials is now fall. In 2015, 39% of weddings happened in September, October and November combined. (So, don’t expect to save money by opting for a fall wedding any more.)

Technology is also infiltrating the wedding marketplace. According to The Knot’s study, 89% of couples report using their smartphone to help plan their wedding in 2015. For example, they may use smartphones to research and contact wedding vendors, to browse wedding gowns and tuxedos, or to manage a wedding registry or personal wedding website. Online RSVP apps are also growing in popularity, as a way to monitor headcount.

Before and After the Wedding

In 2015, more than one-quarter of couples used an outside wedding planner to achieve their dream wedding. But couples should consider reaching out to other outside professionals, including their legal, financial and tax advisers. Beside the costs associated with throwing a dream wedding, there are many other financial issues and administrative tasks to consider before and after you say, “I do.” After all, financial disagreements are a leading cause of marital problems.

Here’s a checklist of important issues to address as couples blend their finances:

Candidly discuss joint finances. For example, how much debt are each of you bringing to the marriage? What about savings? How is your credit rating? The older you are, the more (good and bad) financial baggage you’re likely to bring to the partnership.

Decide on joint or separate bank accounts — or both. Your financial adviser can walk you through what will be needed to combine checking, savings and money market accounts. He or she can also advise you about adding beneficiaries on your IRA and more.

Even if you decide to maintain separate accounts, it may be helpful to have at least one joint account to pay for shared expenses, such as the costs of a mortgage or car, rent, household expenses and childcare. This account is meant strictly for household needs, and it allows you both to keep track of how you are spending money.

A joint account can also help avoid trouble in case one spouse dies. When a spouse or common law partner dies and there are separate accounts, the survivor will be excluded from the other separate account if the estate goes into probate. That could take months.

Coordinate employee benefits. You might save money by eliminating duplicate health care or life insurance coverage, for example. And don’t forget to change beneficiary designations on retirement plans and insurance policies.

Update deeds, wills and power of attorney documents. An estate planning adviser can discuss the full array of estate planning tools, such as various trusts, that might be relevant once you’re married.

Plan financial goals as a couple. Create an annual budget, as well as a contingency plan in case a spouse gets laid off or becomes disabled. Make sure you have an emergency cash reserve equal to several months of income. Designate who will be responsible for paying the bills and reconciling the checkbook.

Also look beyond your current financial situation. For example, discuss what you envision your retirement will look like, and whether current retirement account contributions are sufficient to achieve your long-term goals.

The Next Time Around

People who have been previously married bring additional financial issues to the table, especially if they have children from a previous marriage or are required to pay alimony, child support or insurance premiums under the terms of a divorce settlement agreement. Meet with your advisers to address these issues when blending your finances:

    • Do you have business debts or obligations with your former spouse?
    • Are you required to keep a former spouse on your insurance?
    • Does a former spouse have a claim on your employer-sponsored retirement?
    • Is your former spouse still a beneficiary in your will?

Also consider whether your remarriage will nullify any entitlements to assets from a former spouse. For example, getting remarried could invalidate your right to claim an inheritance or other financial interest.

Live Happily Ever After

Whether it’s your first time down the aisle — or your eighth — marriage is a celebration. Don’t let all of the financial and administrative details that go along with your special day spoil it. Meet with your financial, tax and legal advisers to establish a budget and tackle other financial and legal issues head-on. A little planning on the front end can alleviate stress on your wedding day and beyond.

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