My husband and I tied the knot in 2016 and I still consider us newlyweds. I’m in my late twenties and my husband is in his early thirties. Amongst our friends, many are married, engaged or thinking about popping the question to their significant other. However, we have some friends who are in happy, long-term relationships with no plans to make a trip to the alter. These trendy friends have told us that they feel secure, committed and deeply in love with their partner. However, they don’t see the point of marriage; it seems too traditional and unnecessary for them.
Our friends are not alone; couples are waiting longer to get married or they aren’t getting married at all. As the U.S. marriage rate falls, couples are missing out on many financial benefits of marriage.
Here’s how you may benefit from tying the knot:
Estate Tax Marital Deduction
When a spouse dies, their estate may be passed to the surviving spouse, tax-free. If you are unmarried, you may be subject to the 40% federal estate tax. Even though the federal exemption is high ($11.4 million for an individual), you may still face state level estate taxes, depending on where you both reside.
Gift Tax Marital Deduction
If you’re married, you can gift any amount of money to your spouse tax-free. Unmarried couples may owe gift taxes from simply supporting each other. For 2018, the gift tax exclusion is $15,000 for gifts from individuals and $30,000 for gifts from married couples. Since children are not exempt from gift tax, if you’re married you can gift double the money to your children, tax-free.
Spousal IRA Benefits
If you’re married and one of you is working and the other is not, then the non-working spouse can use the working spouse’s income to qualify for IRA contributions. However, if you’re unmarried, you cannot contribute to an IRA if have no earned income.
Furthermore, if you’re married and your spouse passes away with an IRA, you can roll over their IRA into your IRA. If you aren’t married and your spouse passes away, you’ll have to immediately start taking distributions.
Social Security Benefits
Spousal benefits allow the non-working, or lower earning spouse, to benefit from the higher earning spouse. The Social Security Administration states “Even if you have never worked under Social Security, you may be able to get spouse’s retirement benefits if you are at least 62 years of age and your spouse is receiving retirement or disability benefits. You can also qualify for Medicare at age 65.”
If your spousal benefits are higher than your own benefits, you will get a combination of benefits equaling to half of the higher spouse’s benefit, once you reach retirement age. When the higher earning spouse passes away, the surviving spouse is also entitled to the deceased spouse’s benefits.
Furthermore, if you’re married and divorce, you may also be able to receive benefits from your ex-spouse.
Pension Plan Benefits
If a spouse has a pension and has elected to receive survivor’s benefits, when he or she passes away, the surviving spouse will continue receiving benefits. If you’re unmarried and a partner with a pension passes away, the benefit will not carry over to a boyfriend or girlfriend.
Health Insurance Savings
Married couples can benefit by participating in each other’s health insurance plans. If you’re both working and have employer sponsored benefits, you may find that one of your employers offers a more attractive plan than the other, and you can both join that plan together. If one spouse is not working, she or he can also join the working spouse’s employer sponsored health insurance plan.
Being legally married gives you access to your spouse if he or she becomes incapacitated due to an accident. If you aren’t married, your spouse’s blood relatives may have legal control over healthcare and financial decisions. To avoid this, seek the advice of a financial planner. He or she can help you set up a Medical Directive and a Power of Attorney in case an emergency arises.
If you’re married and your spouse passes away, the surviving spouse has the right to press charges for wrongful death and recover damages. This is something a boyfriend or girlfriend may be unable to do.
Furthermore, if your partner dies without a will, the state will decide where your partner’s assets will go. If your significant other has parents or siblings, they may take priority over a boyfriend and girlfriend.
Both married and unmarried couples who wish to ensure their assets are passed to their chosen party, should seek help from a professional. A Financial Planner can help you design an estate plan and work with legal counsel on drafting a will that honors you wishes.
A Financial Advisor Can Help!
Couples considering getting married and couples that have already tied the knot can benefit to speaking to a professional. A Financial Advisor can illustrate how Financial benefits of marriage will impact your unique situation. Send us a note in the box bellow so you can make the best decision for your future!
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