7 Money Issues to Address Before You Walk the Aisle

So you're thinking about getting married. Congratulations! But before the big day arrives, make sure you and your partner sit down for a serious financial discussion. It's an important step for any couple, but one many people avoid because it's too hard or causes tension in the relationship.

Unfortunately, not having the talk can cause more problems down the road -- due to differences in personal money management habits as well as financial implications related to taxes, inheritance, retirement benefits, and more. In fact, a recent study showed us that while most LGBT Americans have been learning more about the rights and benefits of marriage since the Obergefell ruling, fewer than half have a full understanding of how marriage affects finances. This certainly resonated with me. I've had couples that are thinking about marriage come into my office to ask whether getting married is the right financial decision for them. In my 25 years as a financial advisor, I've never had an opposite-sex couple ask me that question.

By discussing finances upfront, you both enter marriage with your eyes wide open and a plan in place for financial issues. To help you get started, we've outlined seven key areas to address with your partner before the wedding bells ring.

1: Cover the Basics

Understanding your combined finances, as well as each other's money management habits, can alert you to areas of potential conflict and also sets the context for discussions on bigger picture topics. Each of you should share information on: income, regular expenses, existing debt, short- and long-term goals, approach to investing and whether to have joint bank and investment accounts.

As you develop your goals, also create a budget to help you reach them. This may involve compromise as you negotiate priorities and determine where you might need to cut back on spending to boost your savings.

2: Tackle Taxes

Since the Obergefell ruling in June 2015, same-sex married couples can file joint returns at both the federal and state levels. While that simplifies matters, it also means that marriage could have a more significant impact -- for better or for worse -- on your tax picture. Many of my clients have been unpleasantly surprised by the substantial tax burden that marriage can entail.

Your tax adviser can help you determine how your combined incomes will affect your tax bracket. Specifically, whether marriage might trigger a marriage penalty -- potentially increasing your tax burden -- or a bonus that helps reduce your taxes. Your tax adviser can also help you evaluate "head of household" and "married filing separately" options.

3: Review Retirement Plans

You and your partner need to understand each other's vision of a good retirement -- and how you'll achieve it. Share information on current retirement investments. Discuss your end financial goal and how much you'll each need to save on a monthly or annual basis to get there. Know that private, state, and local government employers are required to give same-sex and heterosexual married couples equal access to retirement plan benefits. Similarly, married same-sex couples are now eligible for spousal Social Security benefits.

4: Consider Children

Put simply, children cost money. So if you have or plan to have children, you need to address the related financial needs.

If you or your partner already have children, discuss to what extent you'll share financial responsibility if you marry. If you plan to have children after marriage, discuss how you'll plan for day-to-day costs as well as future expenses, such as college tuition. Realize that you may also qualify for tax deductions as parents.

Same-sex couples also need to pay particular attention to legal aspects of parenting. That is, who qualifies as the birth parent or legal parent? A family attorney can help you work through these issues.

5: Investigate Health Insurance

The Obergefell ruling means same-sex married couples should now have the same health insurance coverage options as heterosexual married couples. However, with this benefit in place, employers may not continue offering benefits to domestic partners, couples in civil unions, or other unmarried couples. Compare insurance coverage options from each partner's employer to determine the best combination of coverage and cost for your needs.

6: Establish an Estate Plan

An estate plan helps ensure that your assets are managed as you wish, now and later. When I meet with newly married LGBT clients, I find it surprising that many have not made necessary adjustments to important financial instruments. A legal spouse often has specific inheritance rights under state law you may want to review with your estate planning attorney. It's also wise to work with the attorney to complete at least the following four documents: a durable power of attorney, a will, a health care power of attorney, and a living will.

Same-sex married couples now qualify for the unlimited marital deduction, which allows a surviving spouse to avoid potential estate taxes upon his or her spouse's death.

7: Discuss a Prenuptial Agreement

This can be a difficult topic to address, since it implies the relationship may not last. But it's an important way to help protect each person's personal wealth.

Discuss what assets each partner will bring into the marriage and how those as well as future earnings or assets might be split in the event of a divorce. Your attorney can help you both determine if this document is appropriate for your situation.

MARGIE ARCHER is a vice president, investment officer, and portfolio manager with Wells Fargo.