The best way to Assume About Cash When ‘Me’ Turns into ‘We’ – San Francisco Bay Instances

By Brandon Miller, CFP–

In her eighth marriage, Elizabeth Taylor was likely quite successful at combining assets with a spouse. But most of us only get married once, maybe twice in our life. So figuring out how to handle money as a couple can be a little trickier.

If you’re new to the jump, here are a few things to keep in mind as your thinking moves from “me” to “we”.

Community property

California is a community owned state. If you get married here, understand how that affects you. The assets and debts that you are getting married with are considered separate property. But almost everything you purchase as a couple is community property, split 50/50 between you. (Gifts or inheritances from third parties received during your marriage are yours alone … unless you mix them with common property, e.g. in a shared bank account.)

This doesn’t seem to matter until either of the D’s comes into play – death or divorce. When a spouse dies, any property held jointly or by the deceased spouse becomes the property of the surviving spouse, unless otherwise agreed in legal documents. When you get divorced, things can get more difficult. Business interests, 401 (k) plans, and annuities can be community owned, which means a former spouse could be entitled to some of your retirement savings.

But hey, this is a column about happier times. So let’s make it easy to choose your partner wisely and understand the community’s property laws.

Cash in circulation

How you handle your money together is probably one of the biggest issues the two of you must negotiate. The straight model of combining all of your money into one big pot doesn’t always work for LGBTQ + couples, or even for many straight couples. There is no right or wrong way to manage your cash flow. So work together to find something that you can both be happy with.

One system that my clients have had tremendous success with is monthly compensation that is split across three accounts. Set up a shared account for all shared expenses, from housing to groceries to gasoline for the cars. Include insurance, health care premiums, deposits in shared savings accounts, etc., and remember to divide the annual expenses by 12 to precisely meet your needs.

Pay this amount into your joint account every month and divide the remaining amount of the allowance between the spouses. For example, if your monthly allowance is $ 10,000 and $ 8,000 is being spent on split expenses, you will need to deposit $ 1,000 into each account. Each spouse can spend their individual money as they wish. If one of you is a donor and one is a saver, both of you can use your share of the money as you wish. This is an amazingly simple, yet effective way to keep the peace and pay the bills.

Taxes

One of the reasons we have fought so hard for marriage equality is because there are literally over 1,000 laws that only benefit and protect couples who have official certification of their “I’m doing” moment. Income, estate and inheritance tax breaks are just the beginning. You also have the option to file taxes together or separately to do things to your advantage. And as long as you are in trouble by December 31st, the IRS will consider you married for the entire tax year. So plan your big day accordingly!

Estate planning

Have you already drawn up your will or power of attorney or other financial documents? Good for you but remember to change her from being an “unmarried” person to being a “married” person after your boo puts a ring on it. And make sure that your beneficiaries are still the people you want to show your generosity to. Haven’t you done your estate planning yet? Do it together because it really is one of the greatest love acts you can show your partner.

Insurance and benefits

Would you be better off sticking to your current health plan or joining your spouse’s program? Could you save money by pooling coverage for your home, car, and more with one insurer? Options like this are another gift of marriage.

Talking about money matters can feel intimidating, especially when you’re new in love. But this is also the best way for you and your spouse to minimize future money struggles and to reap the “marriage” benefits that you have just acquired – the financial benefits that I am, of course, talking about.

The opinions expressed in this article are for general informational purposes only and are not intended to provide advice or recommendations specific to any person or regarding any particular safety. It is only intended to convey information about the financial industry. To determine which investments might be right for you, consult your financial advisor before investing. Past performance discussed during this program is not a guarantee of future results. All indexes referenced for comparison are not managed and cannot be created directly. As always, please remember that investing involves risk and potential loss of capital. Please seek advice from a licensed professional. Brio does not provide tax or legal advice, and nothing contained in these materials should be construed as such.

Brio Financial Group is a registered investment advisor. Advisory services are only offered to clients or prospective clients for whom Brio Financial Group and its agents are properly licensed or exempt. Brio Financial Group cannot provide advice unless there is a customer service agreement.

Brandon Miller, CFP®, is a financial advisor with Brio Financial Group in San Francisco specializing in helping LGBT people and families plan and achieve their financial goals.

Published on May 6, 2021