September 2022 – By Ryan Boyle, CRPC®
To any newlyweds reading this article, congratulations on taking the next step with your spouse! This month’s edition is intended to get you thinking about how you and your spouse can begin to handle your financial affairs from a joint perspective, even if that means handling your finances individually.
What’s yours is mine, and what’s mine is yours, be it items or goals – Combining your financial assets can sometimes simplify your finances, and at other times can cause complications. While some accounts by law are unable to be made jointly, such as your IRA, some couples may prefer to keep their financial independence and keep things separately but supervised by the other. While there is no magic ratio used to determine what should be kept as your own and what needs to be held jointly, communicating with your spouse is the best way to determine how you can jointly manage your assets for your unique scenario, as it’s common for couples to have different risk appetite levels or spending patterns. Aside from the ownership, setting goals as a couple could not only help strengthen your bond, but also can make things easier when you’re both working towards that goal together.
Taxes: Married Filing Jointly, or Married Filing Separately – For households with only one worker, having access to the married filing jointly bracket can provide substantial relief when comparing their income to either a single or married filing separately tax bracket. On the other hand, filing married filing separately could have its own unique benefits given the technical separation of income, such as any having a lower monthly payment on an income-based loan. Both tax brackets have their own unique tradeoffs, and in some cases, you might even switch between how you would file each year. Regardless, there are numerous reasons for filing one way over another when married but being aware of all options that you have available to you along with their tradeoffs can help you save from either a tax or a cashflow standpoint.
Prepare for when you pass and ensure your powers of attorney documents are accurate – Now that you are getting ready to start your new family, it’s time to take into consideration how you plan to support them even after you pass. For those who had a previous marriage, it wouldn’t be uncommon for you to consider leaving something to support a child from a previous marriage. You will also want to ensure your power of attorney documents are up to date as well and make any changes that you see fit. This can help you prevent previous spouses or anyone who you feel would not be needed in this role from having the ability to control your finances, or even your healthcare decisions should you be unable to do so. Lastly, check your retirement, banking, and brokerage accounts to see who the beneficiaries are, and update or add them as needed. In some states that follow the community property laws, some assets will automatically be transitioned to your spouse upon your passing, so it’s important to be aware of your state laws when developing your overall estate plan.
At Vantage, we’re here to help ensure you and your spouse can support each other financially, while providing the guidance you need to be as efficient as possible throughout the process. We look to review your current situation to provide you with your most optimal outcome given your goals and compose the roadmap you need to reach them.
This material is for informational purposes only. It is not a recommendation or solicitation to buy or sell any securities. Vantage Financial is not a tax advisor; please consult your tax advisor prior to making any investment decisions. Vantage Financial is an Investment Advisory Firm registered with the Securities and Exchange Commission (“SEC”). SEC registration does not imply any particular level of skill or expertise.