Are you better off financially if you get married?
As someone who is getting married in just less than two months I am all too aware of the financial impact of my impending nuptials.
The budget has been set, and amended a few times, the funds are depleting quickly as the big day approaches and the 'can we or can't we afford a band?' debate rages on.
And this is all before the big day. But the tossing of the bouquet and the handing out of cake will not mark the end of my marriage-related money management. Getting married impacts your pocket in more ways than you might imagine.
'All my worldly goods I thee endow'
When you get married you take on responsibility for your spouse and that includes financially.
This remains until you die, and can continue even if you divorce (unless you have a pre-nuptial agreement). You may still have to provide for an ex, or share some of your assets and income with them.
Of course, nobody wants to think about splitting up when they are planning a marriage but it is an unfortunate fact that many marriages break down -- there were over a quarter of a million divorcees in 2007.
And not only could there be a divorce settlement to consider, your ex can also have a negative impact on your credit rating, according to credit reference agency Experian.
You should make sure you close all joint accounts and contact credit reference agencies to ensure you do not have an ongoing financial link with your ex.
Romantic stuff eh?
Taxing times
Many of the financial implications of getting married revolve around tax, an area of finance so dull and complex that many people ignore it completely.
However, efficient tax planning can save you (or your estate) thousands (even tens of thousands) of pounds.
And married couples have extra perks.
Capital Gains Tax: When you sell or give away an asset that has increased in value, you may be taxed on the 'gain' (profit).
However if married you can move assets between yourself and your spouse without incurring CGT. This means you can effectively double your £10,100 annual allowance by splitting your taxable assets.
Before 2008/9 CGT was taxed at your highest rate of income tax, so it could be more efficient for married couples to hold taxable assets in the partner's name with the lowest liability.
However, for 2008/9 and 2009/10 there is a flat CGT rate of 18%, so this is no longer possible.
But married couples do lose one CGT benefit. The tax is not payable on your main home but it is payable on extra properties you own. If you have two properties and are not married a couple can both claim that one of them is their principal private residence and is therefore tax exempt. However, married couples are only allowed one principal private residence between them.
Income tax: There are no perks for married couples unless you were born before 6th April 1935 in which case you still qualify for the Married Couple's Tax Allowance.
'Till death do us part'
You about to embark on a life together so the last thing you want to think about is death but married couples do have different rights on the death of their partner to those cohabiting.
Inheritance tax: Everybody can leave up to £325,000 tax-free to their estate on death but everything above this (including property) is taxed at 40%. However transfers between spouses and civil partners are completely exempt from this tax. This is not the case with a partner you are not married to.
Pensions: Husbands and wives, and civil partners usually inherit pension benefits if their spouse dies -- it depends on the pension but this is the norm on most State and occupational schemes. If you are not married you do not usually get this important benefit unless you specifically name your partner on your pension policy.
Wives are currently entitled to a State pension based on their husband's national insurance contributions and after 2010 this extends to husbands and to all civil partners.
You can also inherit any money from life insurance policies tax-free on death of your spouse or civil partner.
Intestacy rules: If your partner dies without a will and you are not married you will receive nothing. If you are married you receive at least the first £250,000 of the estate if it is worth more than that amount.
You also receive a life interest in half of the remaining estate which goes to any surviving children on your death. If the estate is worth less than £250,000 you receive it all.
Also note that a marriage invalidates any will written before the marriage, unless the will was specifically in contemplation of the marriage. If you want to avoid intestacy rules you will need to write a new will.
Debts: Although you cannot inherit a debt unless you were party to it, your husband, wife or civil partner's debts will be paid from their estate before you are entitled to it. You are of course still liable for any joint debts you have, such as mortgage arrears, a credit card or an overdraft on a joint current account. Though this also applies to unmarried couples.
What's in a name?
Finally, your financial providers and credit reference agencies will want to know what you are calling yourself. And what you decide to change your name to alters what you need to do.
Taking your husband's name: If you are taking your husband's name you don't need to do anything apart from let the organisations and bodies you deal with know. They will usually require the marriage certificate, or a copy of it.
The one document you can change before your marriage is your passport -- though you can then only travel after the wedding day. It allows you to go on honeymoon with your married name, but it's also fine to travel under your maiden name and change your passport later. If you need to arrange any VISAs before your honeymoon, it might be wise not to change your passport until after the honeymoon as they may need to match.
Other options: If you are a man wanting to take your wife's name you must change your name officially by deed poll (the marriage certificate won't do), and then inform all of your financial providers.
And if you both want to take a double-barrelled surname, you also have to change your names by deed poll (some organisations may simply accept your marriage certificate as proof but others won't).
Getting married is not just the start of a new life together but the beginning of a financial relationship. Ok, so when I am saying my vows in a few weeks time, I won't necessarily be thinking about the CGT benefits I'm about to gain, but it still pays to know about them.
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