Financial planning for getting married
Getting married is a huge milestone in your life, and as well as many other changes, your finances will be affected. Here's what you should know before you walk down the aisle.
For richer or poorer: getting the basics sorted
Before you walk down the aisle you should make some key decisions about how you and your partner want to manage you money together and separately.
- What are your financial goals? Do you both want to own a home?
- Are your spending habits compatible?
- Are you planning to have children? How would that affect your other goals?
- Who will take on which financial responsibilities? Will you split the cost of living equally, or will you contribute in different ways?
- If one of you already owns some assets, should they be owned jointly?
Whether or not you plan to own them jointly, finding out about your partner’s debts and assets before you get married or move in together is important to avoid surprises later on.
Joint accounts, credit cards and loans
Setting up a joint current account for bills and expenses can simplify your day to day expenditure. You may also want to hold your savings jointly, especially if you're both saving for the same thing (such as a deposit on your first home).
However, be aware that holding accounts jointly makes you both equally responsible in the eyes of the law and your bank. This means that if one of you goes overdrawn on a joint account or gets into debt on a joint credit card, you are both responsible for clearing the debt. Both your credit ratings will be affected, whoever actually did the spending.
If you get divorced, assets held in a joint account will be divided equally by default, regardless of how much each partner contributed. Being aware of these things early on can help you to avoid problems later.
You may decide that you want to keep some separate accounts, as well as a joint account for bills and expenses. This approach could help you to make the most of the varying interest rates and incentives on offer from different banks.
Getting a mortgage together
If you're getting a mortgage together, you'll need to decide whether you want to be 'joint tenants' or 'tenants in common'. Most married couples and civil partners choose joint tenancy.
- Have equal rights to the property, and are equally responsible for the mortgage debt – so if one person stops paying the other will have to cover their share.
- Your share of the property automatically passes to your partner if you die, and you can't leave it to anyone else in a will.
- Your partner can't sell the property or take out extra loans against it without your agreement.
Tenants in common:
- You each own a defined share of the property (not necessarily equal shares).
- If you die your share passes to a beneficiary named in your will, or your next of kin if you have no will, this could be your spouse or civil partner.
- You can remortgage or sell your share of the property at any time.
Alternatively you can have a mortgage in just one person's name, and agree between you how you want to make the monthly payments. However, if you get divorced, the partner without a share in the mortgage would have no legal claim on the property.
Saving on tax
- If one of you is a basic rate taxpayer and the other pays the higher or additional rate of tax, you could pay a lower rate of income tax on interest by holding savings under the lower earner's name. Likewise, if you have investments, moving assets around can help you maximise use of your two Capital Gains Tax allowance.
- If you're married or in a civil partnership, assets can be passed onto your spouse after death with no inheritance tax to pay.
Read more tax saving tips.
Getting protected and making a will
The more financial responsibilities you take on together, the more important it is to protect what you have. Taking out a life insurance can provide a financial safety net in case one of you should die.
Making a will is important to ensure your assets are distributed as you wish when you die. If you’re married or in a civil partnership and you die without a will, your partner will inherit all your personal property and belongings and your entire estate, unless there are surviving children, grandchildren, or great grandchildren. If there are, and there is no will, your partner will inherit:
- All of your personal property and belongings
- The first £250,000 worth of your estate
- Half of your any of your estate over £250,000
If you’re not married, or in a Civil Partnership, there is no will and you die, your partner will not inherit anything at all.
Keeping track of your money
You can use MoneyHub to set up an individual or a joint budget, track your spending and monitor progress towards your goals.
If you have complex financial arrangements, a financial adviser can advise you on joining up your finances in a way that best suits you.
Last updated: 09 June 2015