Financial considerations before marriage?

Submitted by ballpointpen15 t3_11egzir in personalfinance

Hi, me and my partner are considering getting married by late May of this year (yay!) However, I can be a little overly practical about some things. Marriage is an significant financial contract and I want to know with certainty how this might (and will) affect us. I don't have a lot of reliable family members I can ask for advice, so, here I am on Reddit.

We live together in Colorado. We both make $45-$50k a year. I'm a US citizen, he is not (he is here legally though, for whatever it's worth.) Neither of us have ever been married before. We have no major assets to speak of, no real savings, and overall no real wealth to speak of. No children.
I have a small amount of debt, under 1.1k that should be handled before April. My credit score is okay.
He has a bit more debt, 3.5k, although he's been paying it off and bringing up his credit. He is currently on track to have it fully clear by early May.

Background info out of the way, my main questions:

  • Should we consider getting a prenup even though neither of us have any assets or wealth? Obviously we aren't getting married to get divorced, but like I said, I'm a little overly practical. The potential "end" and how that might look has been something we've considered (albeit briefly)
  • How will it affect our taxes? Will making the same amount of money incur a marriage tax penalty?
  • Say our debts are not handled before we tie the knot. Would one individual's debt before marriage affect the other party during the marriage? What about credit score?
  • What other things do you think newly-weds should consider about their finances, before and during marriage?

We plan on doing a courthouse marriage with a small celebration among friends. Right now he has family abroad that aren't currently in a position to make the trip out, so we'd likely have a bigger wedding later on. But also because we don't have a ton of money floating around to make a whole wedding happen by May. Hahaha

Thanks any and all advice y'all can give. 😁

0

Comments

You must log in or register to comment.

RO489 t1_jadyf1h wrote

You don’t make enough or too little to get the penalty, and there’s no penalty in CO. I don’t think you need a prenup since your incomes are similar

Have you lived together? Are you sharing expenses fairly and do you have similar spending/saving habits?

Do either of you have more significantly more income growth potential than the other?

6

ReddSaidFredd t1_jady0hs wrote

Since neither of you have significant assets, there is no reason to get a pre-nup. Its purpose is to protect the assets that you have going into the marriage. Anything you accumulate together during the marriage belongs to you both.

5

Caldos4 t1_jadzgp3 wrote

> What other things do you think newly-weds should consider about their finances, before and during marriage?

In terms of long term stuff... Whose career will be prioritized when it comes to moving for jobs or going back to school to increase earning potential? And what are your expectations in terms of taking care (or moving closer) to elderly parents who potentially live in another country? What are expectations for children, how many, and how soon?

The nitty gritty stuff about marriage is relatively simple for a couple that earn roughly the same income, have limited debt, and few assets. Not much will change.

4

micha8st t1_jadz7ju wrote

Congratulations! Here's hoping you make the no-divorce club!

For us it's 30+ years without a divorce. I was 2 years out of college, she was just out of college, so we had no assets either. We merged everything (except the 401k -- can't merge that). Even all our credit cards are joint.

We went through pre-marital counseling.... and we talked about finances. Both of us came from parents who did have financial issues, so this was a serious topic to us -- more to my wife who felt her parents were borderline committing financial infidelity.

So while we didn't bother with a prenup, we did make a couple financial agreements...

  1. no spending more than 100 dollars without talking to each other first. That's $250 in today's dollars...and we've adjusted the rule a few times since.
  2. no deal is so good we don't wait til tomorrow.

That second one... remember 30 years ago there were no digital mobile phones and no web browers.

I wouldn't bother with a prenup .. what's fair in your case? (And it's easy for him to get around the prenup -- just skip the country...right?)

3

micha8st t1_jadzp54 wrote

Oh...that's right you asked about taxes... that's hard to predict. Under the current tax code (the Trump-era Tax Cuts and Jobs Act) expires in 2025 and is scheduled to revert back to what it was in 2016...unless Congress intervenes. My understanding is that TCJA made things more fair tax-wise for married couples.

1

time_wasting_student t1_jadynl1 wrote

Married filing jointly is what you will now do for taxes for the year 2023, assuming you get married this year. If anything, it will afford you a bigger tax refund this year.

A prenup is probably unnecessary as neither of you have assets to protect.

The other partners debt will only affect the other spouse if you apply jointly for credit, such as for a mortgage. Work to pay off your debts ASAP together.

SMART MOVE on the cheap wedding, hats off to ya. Make it a special day, but don't blow a fortune.

I'm a big proponent of joint finances, unless you have any doubts about the long term stability of your marriage. Which, if you're getting married, I hope you wouldn't have, but some people do I guess. Keeping joint finances is great because there's never a question of who pays what, or "his" vs "hers" or whatever. It's OURS. OUR bank account, OUR finances, OUR taxes, OUR cars, OUR debts, OUR credit cards.

Talk in depth about your financial perspectives, goals and dreams, and then hold each other accountable to them. Too many marriages fail because of financial problems, but if you both can be adults about it, you can build wealth together.

2

SquareVehicle t1_jae0z4i wrote

I very strongly believe every couple should talk to a lawyer to find out what the default state-written prenup says for their state so that you can accurately determine if a custom prenup might work better for your situation. Maybe it would, or maybe the default prenup is fine. Most people don't realize they're agreeing to a prenup one way or the other though. But you should fully understand the most important and far reaching financial legal document you'll ever sign in your entire life. You can just pay for an hour to understand the basics for your state, and if you decide to do a custom prenup then it'll be a few hundred more but then you both can feel safe knowing you're each protected. Sometimes there's some very surprising things in the default prenup, as I learned the hard way when I got divorced even though I never in a million years thought I'd ever get divorced. But shit happens sometimes.

So for things like the debt, in some states you'll become legally responsible for any future debt your spouse racks up. Spouse racks up $50k hidden credit card debt during the marriage? Well you're now legally responsible for $25k of that if you decide you can't deal with drowning in debt anymore even if none of it is in your name.

Anyways other than that, make sure you fill out the W4 for this year as if you were married because when you file your taxes next year you'll be considered married for the whole 2023 year. But also be aware that if you fill the W4 as "married" the form will by default assume only one of you is working. So you either need to allocate extra with holding (the calculator will walk you through it) or just select "single" to ensure you don't under withhold for 2023.

The biggest thing is just making sure you're on the same page about money. That you both (hopefully) prioritize saving and retirement and not spending frivolously. Because if one is a saver and one is a spender that's going to make something that should be quite easy (marriage) into something that is quite challenging.

2

GeorgeRetire t1_jae3dxi wrote

>Should we consider getting a prenup even though neither of us have any assets or wealth?

What do you imagine would be the benefit of this prenup? What would it protect?

Do you know and share each others' long term financial goals?

1