When it comes to dating and relationships, many people live by the rule, “Less history, more mystery.” That may be sound advice when it comes to sharing the sordid details of a past relationship with a new partner, but the same cannot be said of sharing your financial history.
Unfortunately, many people avoid talking about money before they get married, perhaps because they’re shy or think it unromantic. But failing to ask a few important questions of your future spouse can lead to serious problems later on. This is one area where what you don’t know CAN hurt you. With that in mind, here are five money questions you should ask before getting married.
How much debt do you have?
Cathy DeWitt Dunn, a Certified Divorce Financial Analyst (CDFA) and president of DeWitt & Dunn in Dallas, Texas, has worked with many couples on their finances – before, during, and after divorce. She recommends that all couples exchange details about debt before exchanging vows. “Having debt isn’t a deal breaker, but it can challenge your relationship,” Dunn says.
Once you’ve discussed balances, the next step is to figure out who is responsible for what and prioritize paying it off, whether it’s credit card debt, car loans, or student loans.
“Some couples split it up,” Dunn says, “so the person who brought the debt into the relationship is responsible for paying it off. Others will work together. Figure out what makes the most sense for your relationship and situation.”
Should we pool our money?
After the wedding, will your future spouse want to have joint bank accounts, or keep their money separate? A 2010 study funded by the nonprofit National Center for Family and Marriage Research revealed that couples were more likely to break up after they moved money out of joint accounts and kept their money separate.
That doesn’t necessarily mean it’s unwise to keep some funds separate. Some couples choose to maintain separate accounts, some pool their resources, others take a hybrid approach, keeping their own accounts but contributing to a joint account for household expenses. Whatever you ultimately decide, make sure your future spouse is on the same page to avoid conflicts later.
“Pooling your money helps couples get on the same page by eliminating fights and increasing transparency,” Dunn says. “Pooling your money may also help lower administrative costs and simplify your budget.”
Do you have any tax problems?
Abby Eisenkraft, an IRS enrolled agent and owner of Choice Tax Solutions, Inc. in New York, N.Y., believes the most important question to ask is if your future spouse has any issues with the IRS, such as unfiled tax returns, unpaid balances, or mistakes on a prior return. Once you are married, the IRS can take future refunds to pay off old tax debts.
“The spouse who never experienced any tax problems will be in for a rude awakening,” Eisenkraft says. When taxpayers file jointly, they are considered “jointly and severally liable,” meaning both spouses are responsible for all of the tax due, even if one spouse earned all of the income or claimed improper deductions or credits.
Eisenkraft says, “If you think for any reason that your spouse is not doing something correctly, maybe hiding cash or hiring illegal workers, do not file jointly. The IRS allows married couples to file jointly or separately. While ‘married filing separately’ may not be the most beneficial status right now, in the long run, it might be.”
Who will care for aging parents?
For many people, it’s difficult to think about a time when aging parents won’t be able to care for themselves, but it’s a crucial conversation to have with your future spouse. Family members often play a significant role in caring for older generations. According to the Pew Research Center, there are 40.4 million unpaid caregivers of adults age 65 and older in the U.S., a situation that often puts a financial strain on families.
Jacob Dayan, partner and co-founder of the Chicago-based firm Community Tax, says this thorny subject doesn’t get tackled enough. He recommends couples discuss where aging parents will live and who will pay for memory care or other major medical needs. “It’s not that caring for family is a situation that should be avoided,” he says, “but these discussions should absolutely be brought out into the open.”
Do you owe any alimony or child support?
One would think that if you’d reached the point where you’re talking about marriage, you would know whether your future spouse is responsible for paying child support and alimony, but unfortunately, that’s not always the case. Chellie Campbell, a financial speaker, author, and coach, says she once worked with a client who thought she’d hit the lottery when she married an attorney who made $300,000 per year. “She didn’t realize until after the wedding that he paid $150,000 per year in alimony and child support and owed over $100,000 in credit cards. Ouch!”
Asking these questions may feel uncomfortable, but having these difficult conversations before saying “I do” can help prevent problems later on. After all, finances are the foundation of the life you’re building. Nobody should enter into a marriage without assessing whether that foundation is stable.
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