Many of us go into marriage wanting to share everything — bank accounts and all. But there are parts of your financial life that should not be pooled when you tie the knot and that ought to be pulled apart if they are currently combined. Here's the scoop, whatever the stage of your union:
Your Credit Reports and Scores
• What to keep SEPARATE: When you get hitched, you don't have to "marry" your partner's credit. Your credit (or FICO) scores and history are always yours and yours alone — and that's a good thing. Think of your credit report as your grown-up GPA: It's how everyone from lenders to employers gauges you as a financial risk. (And if you and your spouse ever split up, having your own credit will mean having the freedom to build a new, solo life.) If you've just been an authorized user on your spouse's cards, it's time to get credit under your own name. If you have no credit history or a low credit score, get a secured card (you deposit money to activate it) like those at nerdwallet.com.
• What to MERGE: Many couples want to buy big things — say, a home or a car — jointly, and this is a time your credit scores do get connected. When both of you have great credit (especially numbers close to or over 760), there is little credit-related reason to apply jointly, because you'll qualify for the best rates. But if, say, your spouse wants to buy a new car and has a cringe-worthy credit score while yours is A+, your good credit may help. Let's say you have a median (the score in the middle of the three) FICO score of 815, and your partner's is 650. If you apply together, lenders will look at both those scores and probably go with the lower of the two. But since yours is particularly stellar, they may just offer a rate that's a bit better than what a score of 650 would get you, which would in turn ratchet down your monthly payment somewhat. Every penny counts!
That said, beware of cosigning loans you can't pay on your own, in case you divorce or someone loses a job. Need third-party advice on navigating this? Contact a local nonprofit credit counselor via the National Foundation for Credit Counseling (nfcc.org).
Your Wills
• Keep them SEPARATE: You and your husband might have gotten a joint will when you had kids, but these documents have fallen out of favor over the years — they make things more complicated in this era of divorce and remarriage. If you wed today, a lawyer will almost certainly recommend individual wills, which are more flexible down the road (his and your plans for your estate can be identical or entirely dissimilar; it's your call!).
A special shout-out to those contemplating remarriage: We've all heard of those situations where someone passes away and either their kids from marriage number one or those from marriage number two are unwittingly left out of any inheritance, and much bickering and heartache ensue. It's easy enough to avoid that. If you are widowed or are remarrying, work closely with a lawyer, considering each family member, and draw up a new will. For more free help on wills, trusts, and marriage, go to nolo.com and, under the Get Informed tab, choose Wills, Trusts & Probate.
Bank Accounts and Credit Cards
• What to keep SEPARATE: It's vital to keep money in your own name and have access to your own credit for two key reasons. First, autonomy: You're a grown-up who doesn't need every dollar supervised. And second, safety: If there ever came a time when you needed to leave your marriage, having funds and credit in your name would be crucial to your newly single life.
If you and your spouse have only joint accounts, open a checking or savings account (with access to a debit card) and a credit card under your name only. Make sure you're not doubling up on maintenance and ATM fees — shop for low- or no-fee bank accounts at bankrate.com or at a local credit union (find one at ncua.gov), or set up a free checking account at Simple (simple.com).
No need to do this on the sly; make it about the importance of building your own credit to buoy the household and, frankly, so that you can take care of yourself not only if there's a split, but also in case something happens to your spouse.
• What to MERGE: A joint household account for bills and shared goals is, of course, a useful budget-wrangling tool. And a joint debit card and/or rewards credit card can be a savvy money move, too. A family gas-and-groceries card can not only help keep you on budget, but also treat you to some great rewards. One no-annual-fee favorite is the American Express Blue Cash Everyday card, which gets you 3% cash back at grocery stores and 2% at gas stations and some department stores. Shop and compare more cards at lowcards.com.
Be Careful!
Keep beneficiaries updated on retirement accounts. If there's a discrepancy between who's named on your 401(k) and in your will, guess what? The person on the retirement account usually gets it all!
Do I Share My Spouse's Debts If We Divorce?
Not necessarily, if he acquired the debt and it's only in his name — in most states, that is. If you live in a community property state (CA, WA, NV, NM, AZ, TX, WI, LA, ID), the debt he's racking up is generally deemed a shared responsibility no matter whose name it's in.
Have a question? Send it to Carmen at [email protected].
