Planning Before Marriage - Questions to Ask

People contemplating marriage frequently overlook the significant legal and financial implications of the event. Here are some of the most frequently asked questions that couples need to consider.

The Marriage Contract

1. Do we actually have to get a marriage license and go through a formal ceremony to be legally married?
2. Assume that we decide to simply live together and that we make certain that there is not common-law marriage. If we later split up, are we automatically exempt from the hassles that married couples often go through when they get divorced?

Property Ownership/Liabilities

1. When we get married, does the property that each of us owned prior to marriage continue to remain our respective separate property?
2. What are the four main traps that we should be aware of if we want to make sure that our respective separate property remains separate property after marriage?
3. What rules on separate property and marriage property apply in community property jurisdictions?
4. What three choices do we have if we live in one of the 41 non-community property jurisdictions to title property that we want to own jointly?
5. If a husband has substantial pre-marriage debts, can the husband’s creditors collect against the wife? Can the wife protect herself and her assets?
6. If a prospective groom has substantial pre-marriage debt, much of which arose from an earlier divorce, can he file for bankruptcy before his second marriage and wipe out all this debt?

Pre-Marital Agreements

1. Are pre-marital agreements common?
2. Since courts generally uphold pre-nuptial agreements, will every single item agreed to be enforced?
3. What are the issues that need to be considered when writing a pre-marital agreement?
   • Property ownership
   • Allocations of earnings
   • Debt: current and future
   • Waiver of statutory property rights
   • Waiver on divorce
   • Property disposition
   • Death distribution
   • Income tax returns
   • Retirement plan rights
   • Children by a prior marriage
   • Closely held business interests
   • Royalties and residuals
   • Children
   • Cohabitation
   • Definition of dissolution of marriage
4. If we have already been married for a period of time, can we still enter into a post-nuptial agreement on the above listed issues?

Income Tax Planning Issues

1. When we get married and elect to file a joint income tax return, will we pay more or less income tax?
2. If both of us are over age 55 and we each own a separate residence, what are the tax law implications related to selling the homes?

Retirement Planning

1. Concerning money that one spouse has in a retirement plan sponsored by his/her employer, is there any requirement that the other spouse be named as the beneficiary? Is this also the same if both spouses participate in a qualified retirement plan? How can they maximize their retirement plans?
2. Can the assets in an individual’s retirement plan to be paid out to the spouse in a lump sum instead of in the form of an annuity?
3. An individual has young children by the first marriage and wants them to receive the proceeds of the retirement account plan if the spouse does not survive him/her. The same goes for life insurance. Can this be accomplished by naming them as the secondary beneficiary on the plans or insurance?

Insurance Planning

1. Should we purchase more life insurance?
2. What changes should we make in the ownership and beneficiary designations of life insurance policies?
3. What other insurance do we need to consider?
   • Disability coverage
   • Medical coverage
   • Homeowner coverage
   • Auto coverage
   • General liability
   • Estate planning

Estate Planning

1. Does each of us need to update our wills immediately after marriage?
2. What happens if one of us dies without a will?
3. Can one of us disinherit the other spouse by leaving the entire estate to children of a prior marriage?
4. How can one of us provide for children of a prior marriage in his/her estate plan?

Conclusion

Couples contemplating marriage often are so caught up in the significance of the event that they lose sight of the difficult planning issues that they are about to face.. Even when a couple realizes that they will have to make adjustments, they are often unaware of their options.