Newlyweds on Couch

Family First

The Definitive Legal and Financial Checklist for Newlyweds

by Sam Mcroberts

If you recently got married, congratulations! You may feel like you just jumped a number of hurdles and can now rest at the finish line. After the wedding, honeymoon, perhaps moving into a new place, you are ready to move on to the next phase. Now is an ideal time to get your financial and legal “house” in order.

In that spirit, here it is—the Ultimate Financial and Legal Checklist for Newlyweds. Some items are things to do, and some are topics that are a starting point for you and your spouse to discuss how you want to approach certain issues.

1. Wills

Regardless of how many assets you currently have, and whether or not you have children, you need a will. In fact, both you and your spouse need your own separate wills. Depending on what state you live in, your property and assets may not automatically revert to your spouse when you die. Plus, without a will, your estate will go through probate, which is time-consuming and expensive.

If you do have children, you and your spouse can name a guardian for your children in your wills in case something happens to both of you.

Once you have a will in place, update or revisit it at least once a decade or after any big life changes (birth, divorce, marriage, divorce, etc.).

2. Durable power of attorney and advance medical directive

A durable power of attorney is used to name a person (often your spouse) who can make decisions on your behalf if you are incapacitated by injury or disease and unable to speak for yourself.

An advance medical directive is like a power of attorney for healthcare, but more specific. It sets out your preferences on certain medical issues if you become incapacitated and names someone who is appointed to make decisions about medical care on your behalf.

Creating a power of attorney and advance medical directive is something you can do at the same time as your will. Like your will, update at least once a decade or after any major life changes.

3. Financial assets

If you have separate financial assets, you and your spouse should discuss the pros and cons of combining assets or keeping them separate. For many couples, combining assets will simplify managing and accessing those assets, both during your lives and after you or your spouse have passed away.

If you plan on keeping some assets separate, you should have a prenuptial agreement in place, and none of the funds earned jointly should be paid into that asset/account.

There may also be advantages to keeping your accounts separate if you or your spouse have legal, tax, or credit problems.

4. Retirement accounts

Since retirement accounts are held individually, you should discuss with your spouse how you can maximize your retirement savings.

If both of you work, you should consider individually contributing the maximum possible to a 401(k), IRA, or Roth IRA account. If you have a non-working spouse, you may consider maximizing your retirement income by opening a spousal IRA. Spousal IRAs are funded by the working spouse but the account and funds belong to the non-working spouse.

5. Investments

If you or your spouse have investments already, you can add each other to your investment accounts. Whether or not you have investments already, discuss how you would like to manage investments in the future.

Whether you decide to manage investments on your own or through an investment firm or brokers, avoid firms that charge high fees and high-risk investments. High management fees can consume a large portion of your nest egg over time. Investing in index funds like Vanguard is a smart move if you are going it alone.

You can also use robo-advisor tools like Betterment or Wealthfront to manage your investments for a low (or in some cases no) fees.

6. Add your spouse to property title

If you are combining property, like cars, homes, etc., and want to add your spouse to the title, then follow your state’s requirements to do so. There may be a fee to do this, but the fee is generally under $50. While you are doing this, it might be a good time to consider placing your home or property into a trust as part of your overall estate planning strategy.

7. Name changes

If you or your spouse (or both!) are changing your last name, you first need a copy of your marriage certificate. Take your marriage certificate to your local Social Security office to get a new Social Security card. With a new Social Security card, you can get a new driver’s license and request a name change on bank accounts, credit cards, and other accounts.

8. Auto insurance

For auto insurance, figure out who has the cheapest plan or provider, and how much it would cost to add a spouse under an umbrella plan. Umbrella plans are almost always cheaper than paying for two individual auto insurance plans, so this is something that is definitely worth combining.

9. Life insurance

If you didn’t have life insurance before, now is a good time to buy policies—both for you and your spouse. Term life insurance is generally the cheaper option, and the younger you buy, the cheaper it is because you lock in your insurance rates. Whole life insurance may also be a good option for you, depending on your age and financial situation.

10. Health insurance

If you and your spouse both have insurance through work, compare insurance plans and decide who has better coverage and how much it would cost to add your spouse to your plan. It may be worth it for one of you to switch to the other’s plan. If you want to add a spouse to your insurance plan, or be added to theirs, you’ll need to check with the insurance provider to see how much time you have to enroll after a qualifying event.

If you or your spouse need to enroll for health insurance through the healthcare.gov Health Insurance Marketplace, getting married is a “qualifying event” that gives you a Special Enrollment Period in which to enroll. You only have 60 days after your wedding to enroll, so don’t delay!

11. Property/Renters Insurance

If you have homeowners or renters insurance, call your insurance agent to add your spouse to the policy. If you’re moving to a new home, make sure you remember to switch over your coverage to the new home. If you don’t yet have renters or property owner’s insurance, now is a good time to get it!

12. Taxes

In most cases, you qualify for more deductions if you file as married filing jointly rather than married filing separately, but there are some exceptions.

If you just recently moved in together (from another city) you may also be able to deduct moving expenses if you moved far enough away.

13. Manage your credit

Taking a good look at your credit reports and finances now can set you up for financial success and marital harmony later. You can get free credit reports and monitoring through sites like creditkarma.com, and address any issues with your credit reports, dispute wrong information, and make goals for establishing or improving your credit score and history if necessary.

14. Debt payoff plan

One or both of you may have come into the marriage with debt—student loans, consumer loans, mortgages, credit card debt, etc. Make a plan to pay down and pay off your debt. If you talk about it openly now, you can formulate a game plan, and it becomes less of a painful topic in the future.

A debt payoff plan should include strategies for finding ways to increase your income or reduce expenses to put more money towards paying off debt. You can set goals as a couple on how much to pay off by certain dates.

You could also consider looking into debt consolidation options, like SoFi, if your current interest rates are too high.

15. Credit cards

One of you may be better positioned to manage your credit card accounts. If so, you may consider adding them as an authorized user on your credit card accounts so they are allowed to make payments and manage the accounts.

Spending is a topic that can cause considerable friction in marriages, so have a frank discussion about when credit cards should be used, when they shouldn’t, and how to avoid debt. If you have credit card debt, this is a subject that should be periodically revisited to avoid unpleasant surprises.

16. Make a budget

Having a budget is another great way to set yourselves up for marital financial success. You may want to use a spending tracker like mint.com to track how much you are earning vs. spending over a couple of months before you try to set a realistic budget.

Tracking tools are extremely helpful because they can help you see where you may be spending too much, and can also help you set a budget you can stick to, based on what your actual expenses are.

17. Life goals

While you are getting your financial and legal documents and ideas in order, why not talk about the other important things—what do you want out of life? What are things you would like to accomplish on your own and as a couple? And how can you work towards those goals?

18. Career goals

Depending on where you are in your career, you may not have an idea yet of the career path you would like to take. Or perhaps you are already looking for a major career change. You and your spouse should discuss what your current and future career goals are, especially since some of those goals may require compromise by you or your spouse.

19. Schedule time to revisit goals

If you have made goals for getting out of debt, saving, building credit, achieving life goals, etc., agree on times when you can revisit your goals. If you are really dedicated, and your goal is short-term, maybe that would be once a week. For other goals, perhaps you can check in with each other about progress once a month, once every few months, or once a year.

Planning for the future and discussing financial and legal issues with your spouse doesn’t sound romantic, but you will be starting your marriage off on the right foot if you do it.

Congratulations again and happy planning!

And, remember, Tomorrow is not a law firm, this blog was not written by a lawyer, and we do not provide legal advice. When in doubt, talk to a licensed attorney in your area.