Financial Benefits of Marriage (Yes, They Exist)

Ignore the price tag on your wedding and think big picture

By Eric Althoff

Getting hitched is about many things: love, emotional health and well-being, commitment, fathers-in-law who own shotguns — and also economics.

When you marry, you and your spouse effectively enter into an agreement of sharing not only your lives, but your financial assets as well. As with any other team-building enterprise, each party to a marriage brings his or her strengths to bear, with the hope that collectively they will outweigh individual weaknesses.

The same is true of the financial advantages of marriage.

Benefit #1: Lower taxes

Come tax time, marriage offers you certain benefits when filing jointly with your spouse. Many people worry that the so-called “marriage penalty” will result in paying even higher taxes than while single.

While this is an understandable fear, particularly for those who earn a rather decent living, the fact is that married/filing jointly on a tax return can actually be to your advantage. Filing jointly with your spouse allows you to take more deductions than when were you single. (Single people pretty much get a raw deal from the government all the time.) Deductions can be made for children, payments on a mortgage, certain ownerships and other things that go along with sharing a life with your spouse.

Benefit #2: Health insurance savings

Most employers and private insurers offer benefits options for spousal coverage as well as for the employee. In certain states, this also extends to same-sex unions as well. This can be advantageous when one spouse is not covered or works in an industry that traditionally does not offer health coverage, and can be a tremendous financial relief to anyone who is paying for his own health insurance out of pocket.

Paying for two separate policies is nearly always more expensive than a single family plan. Single-payer plans are notoriously expensive, so being able to get under your spouse’s umbrella of coverage will save you a lot of money in the long run, particularly when you get sick.

And the money you save can be spent on…

Benefit #3: Gifts not taxable

Perhaps you recall that scene in “The Shawshank Redemption” when Andy Dufresne boldly asks the prison guard, “Do you trust your wife?” before explaining to him that the IRS allows a “gift” from one spouse to the other that cannot be taxed by the government.

This is a way around the gift tax, which imposes a taxpayer tariff on gifts over $12,000 in value. U.S. News and World Report says that spouses are almost universally exempt from even that high limit.

This is something to keep in mind if you’re thinking about gifting your woman your signed, gold Elvis bust.

Benefit #4: Estate tax

The “death tax” or “inheritance tax” is a tax paid by the recipient of an estate when the owner dies. Generally, spouses do not pay estate taxes, but the IRS has certain rules about this.

The surviving spouse can take the marital deduction on their tax form, provided the property passes to him “outright.” Unless you are wealthy, the federal government will not impose a death tax, as typically the tax kicks in for a surviving spouse at $2 million.

Benefit #5: Financial cushion if you divorce

Marriages don’t work out sometimes. OK, often.

In the unpleasant event of divorce, having been married can actually give you a financial cushion against the costly dissolution of marriage process and the division of marital assets. Without a legal jointure of you and your partner, there is no guarantee at all that alimony or spousal support will be granted by the judge.

Again, while no one hopes for this outcome, it’s good to know that you have certain insurance if divorce becomes inevitable.

Benefit #6: Social Security and pensions

Government Social Security payments go to a surviving spouse or to the divorced spouse if you were married more than 10 years and the payouts to the former spouse are greater than your own. Pensions and other retirement plans can also be collected by a surviving spouse, although the laws about this, as well as tax rates, vary.

Benefit #7: Collective property

Bank accounts, homes and various other properties are more easily co-owned by marital partners than they are by unmarried partners and, more importantly, they can be easier to divide up if the marriage doesn’t work.

If an unmarried couple splits up and only one person’s name is on the cohabitated home, things can get ugly (and expensive) quickly. The same is also true of cars and other types of financial accounts. The partner with no title to the asset can find himself in trouble during a separation. Even if he’s invested his own money into the home/car/etc., without a legal claim to the asset, it’s all for naught.

Collectively owning homes and having joint bank accounts ensures a more equitable division of assets upon divorce.

TAGS: finances, marriage, money management