Start your marriage on firm financial ground
By Pat Curry • Bankrate.com

If you got married in 2002, your tax status is just one of a host of financial situations that need attention in 2003.

Here are some of the issues you need to pay attention to this year and some tips from top financial advisers on getting your marriage off to a great start.

Taxes
In the eyes of God and the wedding guests, you became husband and wife when you said 'I do.' As far as the IRS is concerned, you were married all year. The choice you'll face in 2003 is whether to file a joint return or two returns as 'married filing separate.'

"They will most likely benefit from filing a joint tax return," says Bob Doyle, a certified public accountant and personal financial specialist at Spoor, Doyle & Associates in St. Petersburg, Fla., but it's worth a conversation with your accountant before you file a first return.

"It may be more advantageous to file married filing separate if your new lovely spouse has a lot of back taxes they never paid," Doyle says. "Once you file a joint tax return, your liability comes into question."

Eva Rosen is an enrolled agent, licensed by the Treasury Department to represent taxpayers who are in trouble with the IRS. She's also an educator and author, but is best known on the Internet as the Tax Mama. She agrees with Doyle, saying she sees back-tax problems most often with entrepreneurs.

"If you're getting married to someone who is self-employed, you can almost be assured that they have tax problems," she says.

Rosen says the tax relief act passed by Congress in 2001 "basically boils down to not a heck of a lot" in regard to reducing the infamous 'marriage penalty.'

"If you've just gotten married, your combined standard deduction decreases by 26 percent (from when you were single)," Rosen says. "It will take until 2010 for it to match the deduction for two single people."

With your combined salaries, you may also find that you're losing standardized and itemized deductions that phase out at higher income levels.

If either your tax bill or your refund is large, consider adjusting your withholding to accommodate your new tax status.

Financial documents
One of the first financial events for newly married couples is opening a joint bank account and applying for credit cards.

Be sure that accounts can be accessed by either person on their own -- it should be recorded as John or Mary Smith, not John and Mary Smith. New brides also shouldn't forget to tell the Social Security Administration if they're using their husband's last name.

If you're moving into a house owned by your new spouse, it won't be in your name. Should you be added to the mortgage? Doyle says that in most cases, it doesn't make sense to do that.

If you have a retirement account, make sure your new spouse is added as your beneficiary unless there's a prevailing court order from a previous marriage that requires listing your ex-spouse, or if you want the funds to go to your children or someone else. Your spouse will need to sign off on that arrangement.

Stephen Wetzel, the director of the Certificate for Financial Planning program at New York University, brings up one unique but important scenario. If you own a house you inherited from your parents, the title may be listed as "joint with rights of survivorship."

"If you die, it would go to your siblings, not to your spouse," he says. "Retitle the property."

Housing costs
Speaking of houses, keep in mind that a home is a major investment that will impact your family for years to come. Make sure you're ready to be a homeowner.

"It will be very tempting to buy a home," says Dianne Wilkman, president and CEO of Springboard Consumer Credit Management, a nonprofit consumer credit counseling organization. "That's a huge commitment that will drive the family finances in every other way. We do a lot of housing counseling. Committing too much of your income to housing is very stressful."

Wetzel says he sees it, too. Even people who are earning high incomes often are "in la-la land," he says, when it comes to understanding how much it costs to buy and maintain a house.

Insurance
If ever there were a time in your life to look at your insurance situation, it's now, says Dave Evans, vice president of retirement and financial planning with the Independent Insurance Agents of America.

If you have life insurance (typically through your employer), Evans notes that your spouse will automatically be your beneficiary in most states, regardless of who is listed, unless your spouse agrees to a different beneficiary.

In any case, you need to broaden your insurance planning to include your spouse.

"You've got to really start thinking about, 'Do I have adequate insurance?'" Evans says. "Think a little forward. Insurance isn't necessarily guaranteed. Once you're married, you need to start thinking out a few years. That impacts the kind of insurance you might want.

"What's the right kind of policy given my new set of circumstances? Term, whole life? We tend to buy insurance for assets -- car insurance, mortgage insurance. With marriage, you need to think more holistically. For some couples, forced savings are not a bad thing. When my wife and I started out, the only money we were saving was in a life insurance policy."

It's also an important time to look at your disability insurance. Now that you have a family, your ability to earn an income takes on added importance. The sooner you get it, the more affordable it will be.

Estate planning
If you haven't done it already, you need to do it now that you're married.

"It doesn't matter how much you have," says certified family law specialist, attorney, certified financial planner and author Violet Woodhouse. "You may have employee benefits. It's a major tragedy to not have some kind of estate planning done that addresses various interests, especially if there are children ...

"If you don't have kids, you may want your money to go to a poor relative or to a charity. Otherwise, the laws of the state will dictate how it goes, and you have no control whatsoever."

Savings
Doyle says the top goal he has for newly married couples is to set aside three months of living expenses in an emergency savings account.

"Don't worry about anything else until you do that," he says.

Next, he recommends that both spouses participate in a 401(k) plan, starting by maxing out the plan that has the best employer-matching program.

After that, it's likely that the couple will buy a house.

"Now we've established a savings plan, a 401(k) plan, we've got a house with a mortgage, and they're paying real estate taxes and escrow. They're probably spent all their money."

Looking for more suggestions on starting off marriage on the right financial footing?

• Take a look at this Bankrate.com page, which provides plenty of info concerning marriage and your finances.
  
  
• Capital One offers this list of questions to help couples talk about money issues.
  
  
• Also, check out this information on New Families and Money from Consolidated Credit Counseling Services, a Fort Lauderdale, Fla., consumer credit counseling agency.

-- Updated: Dec. 19, 2002