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Weddings > Tying the Financial Knot

TYING THE FINANCIAL KNOT
By Maggie Foster (28 Mar 2006)

Marriage counsellors say that when married life founders, it is invariably due to financial problems. Image courtesy of Maz of Leicester.Marriage counsellors say that when married life founders, it is invariably due to financial problems. Bearing that in mind then, married couples would be well advised to take a close look at their finances in the very early stages of the relationship. So exactly what should you be thinking about? Maggie Foster considers the issues of Joint Bank Accounts, Mortagages, Wills, Income Protection Schemes, Life Insurance, Power of Attorney, Tax and Savings.



JOINT ACCOUNTS

Many couples decide to pool their finances via a joint account after marriage, and this is certainly a good way to streamline domestic finances. But it can also lead to wrangling later on, especially if one person earns far more than the other. Remember also that if it's a joint account, you're both liable for the loans and overdrafts on it.

Some independent financial advisors (IFAs) recommend that you combine both joint and individual accounts, paying a fixed amount into the joint account each month to cover any shared expenses like bills etc.

JOINT MORTGAGE

The family home is a core part of any marriage, but it's vital that you sort out your ownership arrangements. Many couples choose to live in a house already owned by one spouse, but this can mean that there's only one name on the deeds - which could spell big trouble later on.

If you do put two names on the deeds, consider whether the family home is better owned via a joint mortgage or as tenants in common. In a joint mortgage, your share of the house automatically goes to your spouse on your death. But in a tenants in common arrangement, your share will go to whoever you've nominated in your will - which can be valuable if you want to make sure that a relative inherits a share, for example.

WILLS

A surprisingly large number of people don't make wills, but whether you do or don't, marriage is a good time to set one up - as in the above example. If you already have one, there's an even stronger case for a new will because wills that were written when you were single become invalid after you marry.

INCOME PROTECTION

Will your mortgage be covered if one spouse dies or falls critically ill and the other is unable to meet the repayment costs? Income protection insurance is something that should be considered in this instance.

LIFE ASSURANCE

Marriage is often the first time in a couple's life that the two people find themselves financially responsible for someone else. With those responsibilities, it's worth considering taking out life assurance, which will provide for the other in the event of death.

FAMILY FINANCIAL PLANNING

Marriage is often followed by a family, and children are often followed by school and university fees. Couples may want to consider saving into a fund for fees in years to come.

POWER OF ATTORNEY

Although not strictly financial, some financial advisers will recommend that the couple arrange an enduring power of attorney to take care of arrangements in unforeseen circumstances.

Say one had a terrible crash or became mentally unsound - power of attorney would allow the husband or wife to make decisions for them.

TAX

Finally, there are also a host of complicated tax issues to consider. Although the Government's main incentive to married couples - the married couples' tax allowance - is no longer in existence, there are ways in which judicious administration of your affairs can save you money.

For instance, you can move savings around to make the most of both couple's tax allowances, and there are also ways to save on hefty inheritance tax bills when your assets are finally bequeathed to your children. That's especially important these days, when house prices are regularly busting through the inheritance tax threshold of 250,000.

For tax matters in particular, and personal finance matters in general, it's worth getting some expert help through the money maze and that's where an IFA can be invaluable.

A truly independent IFA will be able to look at your individual circumstances and advise on the various decisions you'll need to make. Find one near you by calling IFA Promotions on 0800 085 3250 or visiting www.unbiased.co.uk

Admittedly, talking about inheritance tax and savings allowances probably doesn't sound too appealing to newlyweds or brides- and grooms-to-be. But as those marriage guidance counsellors will confirm, putting your financial house in order is an essential way of making sure that the marital home remains a happy one.

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