These three pieces of your financial story can change after you’ve tied the knot. What I’m about to go over are discussions that you REALLY should have BEFORE you get married, but it’s also better late than never.
Be upfront about how much debt you owe. Getting married doesn’t mean that you will automatically take on your spouse’s debt, but lenders will be looking at both of your debt histories when you go in to make large purchases, like a home, so it’s best to be transparent. The way your debt is managed after marriage is also dependent on the state you live in. If you live in a Community Property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin), each spouse might have an automatic half-interest in the property and debts acquired during the marriage. This can include income received, property acquired, and debts acquired.
Regardless of the day and month that you get married, the IRS will consider you married for that entire year. This means that the IRS will count your income as combined alongside your partners, which can bump you into a higher tax bracket. If you don’t remember to do this and pay too little in taxes, then you can be fined with “the marriage penalty.” The key takeaway? Know what your combined income will be and learn about filing joint taxes before April so that you’ll know about penalties in advance.
Even after you get married, your credit report remains just yours. Even if you change your name, your new name will be added to your current credit as an alias. Thus, you and your spouse will always have separate credit scores that are tied to your individual social security numbers. However, if and when you open a joint account, anything from that account can affect both of your credit scores, and when you’re applying for a mortgage, the lender will look at both of your scores when you apply. The takeaway? If one spouse has bad credit, it may be beneficial to apply for loans and credit individually.
Make a date to sit down and create a budget with your partner. Now that you’ve merged as a legal union, so have your debts and bills. Make sure you’re on the same page from the start so that you don’t face surprises and frustrations down the road.
Most importantly, decide on this account ownership. Do you want to keep accounts separate, merge into a joint account, or do a little bit of both?
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