Since the engagement, everyone has been asking “So, when’s the wedding?” Well, we aren’t really planning one right now. Here are the reasons in no real order:
- Marriage penalty tax
- M is divorced and has a child from a previous marriage
- Neither of us really feel like blowing money on a wedding
- I have 6 figure student loan debt
- We are trying to start a family
Marriage is a legal contract and nothing more. People add the other stuff – mainly the religious part (we aren’t particularly religious but our parents are). Don’t get me wrong, I fully respect the institution of marriage and the commitment and all that it entails. It’s just that legal marriage isn’t the necessity it was for women as it is today.
Most people think you get a tax break by getting married. It depends. Most people don’t realize that the married filing jointly tax brackets are not double the single brackets. Depending on how much you and your spouse make, you may actually pay a marriage penalty tax. This mainly occurs when you both make a similar income. The marriage bonus mainly applies to couples where one spouse makes a lot less or is a stay at home parent.
Then there is the possibility of divorce. Divorce rates are going down and are lower among doctors (but higher among female physicians), but most of us still have a 30%-ish chance it won’t work out. Would you sign a contract that said things don’t work out in 30% or more cases in which case you may lose half of your retirement and possibly a % of your future income? Of course not. But that’s what a marriage contract is. For some reason, all logical reasoning goes out the window when it comes to the marriage contract and nobody thinks they will be in that 30%. Of course there are lots of benefits to being married – spousal Roth IRA, unlimited gifts to each other, and double the federal estate tax limit to name a few.
Divorce laws are state specific and how they “split things up” falls into two categories – community property and equitable state. In a community property state (Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin) any assets (and debts) acquired during the marriage are considered to be equally owned by both parties. In an equitable state, the more common type, anything acquired during the marriage is considered the property of the spouse that earned it.
Then there is spousal support or alimony. In some states, while a divorce is in process, you may have to pay pendente lite support, or basically, alimony until the divorce is finalized and then pay actual alimony. Alimony laws vary by state in terms of how much and how long. Any high income earner should seriously consider a pre-nuptial agreement prior to marriage.
Bring in kids from a previous marriage and that can complicate things more. Laws are also state specific for child support and generally do not consider the income of a new spouse.
What do you think? Did you consider marriage as a legal contract before getting married? Comment below.