Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
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Phinance
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Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by Phinance »

My fiancée and I are “new age” I suppose in that we were are considering living together as two high income people (both physicians) instead of marrying to avoid the marriage tax penalty. In addition, we have a significant net wealth difference (my>>her) which worries me if we marry then get divorced (do prenups even work?).

This now seems a little naive as I’ve learned of some of the other tangible financial perks of marriage (no gift tax>?, deductible health insurance, HSA contribution, estate planning, doubling amt of backdoor Roth per year, buying home, filing taxes, children custody if we have any). I’ve learned some of this as I was adding her to my employer’s health insurance (She is starting her own practice so will take some time before she ramps up income).

What do Bogleheads feel about the institution of marriage from a financial perspective? :D (Love and partnership is solid whether marriage or no marriage route, no commentary needed on this, only financial please)
Last edited by Phinance on Sat May 04, 2019 5:03 pm, edited 1 time in total.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by MrJones »

Been there. As you noticed, much of our legal, financial, and policy frameworks are setup around using legal marriage as a shortcut to recognition.

My bet is, you'll only notice more of this with time. Don't have a living will? Doesn't matter if you're married. Have kids? Custody frameworks revolve around marriage. Etc.

The pure practicality benefits trump all other reasons for marriage, IMHO.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by LadyGeek »

Phinance wrote: Sat May 04, 2019 4:32 pm What do Bogleheads feels about the institution of marriage from a financial, sentimental, and practice component?
Let's just discuss the financial component. Anything else is a relationship issue, which is off-topic. See: Acceptable Topics and Subforum Guidelines
This is an investing and personal finance forum. We also maintain a subforum that allow our members to discuss consumer goods and services and recreational activities. Anything else is considered "Off Topic" and is not acceptable on this forum.
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Phinance
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by Phinance »

I will addend my post to reflect financial only. Thanks for heads up.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by mortfree »

Are you in a common law state?

Just adding her to your health insurance could imply marriage.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by midareff »

In a first marriage with children expected in the future there is much more at stake than financial accounts. In a second or third marriage where both already have children there may not be much more at stake than financial accounts and a pre-nup. Whatever works for the two parties involved.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by Phinance »

Dont’ know anything about commonlaw, we’re in Oregon.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by mortfree »

Phinance wrote: Sat May 04, 2019 5:08 pm Dont’ know anything about commonlaw, we’re in Oregon.
Ok. Quick search shows Oregon is NOT a common law state. Your plan to be together but separate would have been futile if you were in a common law state.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by Phinance »

I see, thanks.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by Tamarind »

Not sure what's right for you. You can always choose to get married later. You cannot so easily change your mind the other way.

I think the financial and legal benefits of marriage are significant. I would particularly highlight the automatic presumption of paternity. For someone with significantly more wealth, there is clearly some risk of loss. If you want the try a prenup, be prepared to also accept further inconveniences like maintaining extra accounts to minimize mingling of premarital assets.

If you decide to continue with separate finances without marrying, consider revisiting that decision and giving it a long hard think before you have children. Both of you are high earners, but it often falls on mothers to step back from their careers while children are young. If you are also unmarried and keeping separate finances, that would compound the unbalanced impact, imo.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by Kenkat »

If you think you will have children, I would get married. Marriage provides financial safeguards and security to children and your partner. Once you have children together, you will be forever involved financially with them. No kids planned? I’d probably stay single given you both have solid careers and earning potential.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by JGoneRiding »

mortfree wrote: Sat May 04, 2019 5:11 pm
Phinance wrote: Sat May 04, 2019 5:08 pm Dont’ know anything about commonlaw, we’re in Oregon.
Ok. Quick search shows Oregon is NOT a common law state. Your plan to be together but separate would have been futile if you were in a common law state.
Oregon is also NOT a community property state. Increasing how wella fair prenup would work. Fair is still important judges toss them if they think they are extremely one sided. But almost any prenup should allow for retention of pre marriage assets.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by YttriumNitrate »

Phinance wrote: Sat May 04, 2019 4:32 pm My fiancée and I are “new age” I suppose in that we were are considering living together as two high income people (both physicians) instead of marrying to avoid the marriage tax penalty.
Are you sure there would be much marriage tax penalty? Under the new laws, it looks like two people, each making $350,000, would only be paying on the order of an extra ~$1,500 (https://tpc-marriage-calculator.urban.org/) if they get married.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by Phinance »

Very helpful. Thank you. What about Back-Door Roth contributions, could I invest 12,000 total (6,000 for each of us) if we are married? Or would each have to do 6,000 through their own account? Seems like HSA I can contribute for both but wondering if Back Door Roth is different? :?
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by Socrates »

Based on 1st paragraph, I would not get married.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by CoastalWinds »

OP, could you elaborate on the marriage tax penalties you’re referring to? The new tax law helped eliminate the most obvious of these by making the brackets for MFJ double those of filing single.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by RadAudit »

Based on the first paragraph, how are you going to handle combined / household expenses?
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by mrspock »

Financially, it depends on what stage of life, and/or high NW. If you are mid-life or have a significant net worth, doesn't make much sense to me.

I can handle & appreciate the division of wealth created when you were married, the spousal support though? That's where they lose me and the risks get too high, too unbounded. By staying unmarried, we both have our careers, and the ability to be 100% independent of one another should the need arise.

Oh, and to solve the tax problems...my compromise here is just to get married in my 80s/90s when I'm close to kicking the bucket. If I go sooner or unexpectedly get by a bus.... oh well, there's only so much I can do. I'm actually looking at the possibility of a multi-generational "Dynasty" trust as an option as well.

This is going to sound really unromantic, but the way my SO and I discussed this & cohabitation was: let's figure out how the divorce or break-up would look like, and then decide. This way we both know exactly what expectations we have of each other. It was helpful for her to think about the situation if she basically inherited everything from me tomorrow due to my untimely demise (which she would!). Would she risk her own financial independence & freedom from having to ever work again for a future partner? (no) I totally hope she'd meet another guy to live out her years with, but the money was intended for her, and is stipulated as such in my estate plan.

Super hard topic, super personal, good luck.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by Thesaints »

If you both made enough money marriage came with a large tax penalty under the old law. These days one has to make a lot more to be in the penalty area.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by Tamarind »

Phinance wrote: Sat May 04, 2019 7:27 pm Very helpful. Thank you. What about Back-Door Roth contributions, could I invest 12,000 total (6,000 for each of us) if we are married? Or would each have to do 6,000 through their own account? Seems like HSA I can contribute for both but wondering if Back Door Roth is different? :?
IRAs are always individual. Marriage doesn't change that. If one of you were not working, marriage would influence whether the non-working spouse could contribute.

With an HSA, your contribution limit is dependent on whether you are covering self or family, but the account itself only belongs to one of you.

These kinds of uneven distributions of asset ownership are a major reason divorce courts have special ability to divide retirement accounts.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by middistancerunner »

CoastalWinds wrote: Sat May 04, 2019 7:38 pm OP, could you elaborate on the marriage tax penalties you’re referring to? The new tax law helped eliminate the most obvious of these by making the brackets for MFJ double those of filing single.
Not OP, but I believe my partner and I would face a marriage penalty due to the new SALT limits, and could be relevant here.

Between state income and property taxes we each basically fill up the 10K SALT limit. Then we split $16,000 in mortgage interest between the two of us, so our total deduction is about $18,000 each, or $36,000 total, and $6,000 per person above and beyond our standard deductions.

If we were married it’s my understanding we would get 10K SALT together, plus $16,000 mortgage interest, so we’d only barely exceed the standard deduction of $24,000.

A more rare situation arises from the fact that he’s on my HDHP, and by dint of us both having a family HDHP, we both get to make a $7,000 HSA contribution. That is a pretty sweet deal that would go away if we married, though not sure I’d count it as a marriage ‘penalty’ since it’s more of an ‘accidental domestic partner loophole.’
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by middistancerunner »

Also worth saying though that I don’t think ~$4,000 in tax savings should make the difference either way. And of course we’d save money elsewhere if we married, like I currently pay taxes on the health insurance my work provides him, and wouldn’t any longer.

To OP, as a fellow non-married couple, we’ve been really happy having finances not arbitrarily merged too soon, but as we’ve been together longer and longer (10+ years now) and our financial futures and plans merge, it’s become something we’ve naturally started considering as a convenience for things like medical decision making, wills, and future children.

I don’t think there is much reason to rush - I have really liked the way merging finances at exactly the pace that works for us has allowed us to build our relationship. You can keep marriage on the table if it ends up making the most sense.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by yeledbed »

This makes me want to share my marriage story. We had been happily partnered for 12 years, with no plans for kids or marriage. I was actually fairly opposed to the concept of marriage, especially without kids. My partner suddenly grew so tired of his job, that he just couldn't take it anymore. He never earned that much money anyway, and my career was taking off. The year my annual bonus was more than his total annual earnings, he decided to quit. He needed health insurance, so we got married as cheaply as possible (by a local sheriff) and went on a week-long camping trip as our honeymoon.

The next week, when I returned to work, it was time to enroll for the following year's benefits. A new benefit being offered was health insurance for domestic partners. Turns out we didn't need to get married for the health insurance after all. 6 years later, we're happier than ever and I'm really glad we married. (And there's been financial benefits such as lower taxes since we're a single-income household.)

As others have said, if you plan to have children, it's probably a good idea to marry.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by 123 »

As two high-income individuals with careers as physicians I don't see much reason to marry until you decide to have children. You both can likely easily support your own household so just do a lot of visiting with each other and enjoy each other's company. Marriage introduces complications that can cause you to make career/job adjustments that you could otherwise avoid. As long as you get along well why complicate it with marriage?

A marriage can complicate the finances sometime long after the marriage has ended.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by Crimsontide »


A marriage can complicate the finances sometime long after the marriage has ended.
Amen
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by leeks »

Kenkat wrote: Sat May 04, 2019 6:35 pm If you think you will have children, I would get married. Marriage provides financial safeguards and security to children and your partner. Once you have children together, you will be forever involved financially with them. No kids planned? I’d probably stay single given you both have solid careers and earning potential.
+1
It is just so much simpler to be married if you become parents together.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by CoastalWinds »

middistancerunner wrote: Sat May 04, 2019 8:11 pm
CoastalWinds wrote: Sat May 04, 2019 7:38 pm OP, could you elaborate on the marriage tax penalties you’re referring to? The new tax law helped eliminate the most obvious of these by making the brackets for MFJ double those of filing single.
Not OP, but I believe my partner and I would face a marriage penalty due to the new SALT limits, and could be relevant here.

Between state income and property taxes we each basically fill up the 10K SALT limit. Then we split $16,000 in mortgage interest between the two of us, so our total deduction is about $18,000 each, or $36,000 total, and $6,000 per person above and beyond our standard deductions.

If we were married it’s my understanding we would get 10K SALT together, plus $16,000 mortgage interest, so we’d only barely exceed the standard deduction of $24,000.

A more rare situation arises from the fact that he’s on my HDHP, and by dint of us both having a family HDHP, we both get to make a $7,000 HSA contribution. That is a pretty sweet deal that would go away if we married, though not sure I’d count it as a marriage ‘penalty’ since it’s more of an ‘accidental domestic partner loophole.’
Ah yes, good point, I forgot about that one. $10K SALT if single, and $10K SALT if MFJ. That ain’t right!
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by Church Lady »

$10K SALT if single, and $10K SALT if MFJ. That ain’t right!
Shhhhh!

On behalf of the filing status = Single of America :D
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by Call_Me_Op »

mrspock wrote: Sat May 04, 2019 7:51 pm This is going to sound really unromantic, but the way my SO and I discussed this & cohabitation was: let's figure out how the divorce or break-up would look like, and then decide. This way we both know exactly what expectations we have of each other. It was helpful for her to think about the situation if she basically inherited everything from me tomorrow due to my untimely demise (which she would!). Would she risk her own financial independence & freedom from having to ever work again for a future partner? (no) I totally hope she'd meet another guy to live out her years with, but the money was intended for her, and is stipulated as such in my estate plan.
Infinitely logical - perhaps you are indeed a Vulcan.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by fru-gal »

Tamarind wrote: Sat May 04, 2019 6:22 pm I think the financial and legal benefits of marriage are significant. I would particularly highlight the automatic presumption of paternity.
I seem to recall reading that guys have been obligated to pay child support for children born to their wives while they were married even when DNA shows they are not the biological father.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by Tamarind »

fru-gal wrote: Sun May 05, 2019 6:59 am
Tamarind wrote: Sat May 04, 2019 6:22 pm I think the financial and legal benefits of marriage are significant. I would particularly highlight the automatic presumption of paternity.
I seem to recall reading that guys have been obligated to pay child support for children born to their wives while they were married even when DNA shows they are not the biological father.
Yes, I meant the other way round, that a married father would have the presumption of custody rights in the event of a split.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by Thesaints »

middistancerunner wrote: Sat May 04, 2019 8:11 pm
CoastalWinds wrote: Sat May 04, 2019 7:38 pm OP, could you elaborate on the marriage tax penalties you’re referring to? The new tax law helped eliminate the most obvious of these by making the brackets for MFJ double those of filing single.
Not OP, but I believe my partner and I would face a marriage penalty due to the new SALT limits, and could be relevant here.

Between state income and property taxes we each basically fill up the 10K SALT limit. Then we split $16,000 in mortgage interest between the two of us, so our total deduction is about $18,000 each, or $36,000 total, and $6,000 per person above and beyond our standard deductions.

If we were married it’s my understanding we would get 10K SALT together, plus $16,000 mortgage interest, so we’d only barely exceed the standard deduction of $24,000.

A more rare situation arises from the fact that he’s on my HDHP, and by dint of us both having a family HDHP, we both get to make a $7,000 HSA contribution. That is a pretty sweet deal that would go away if we married, though not sure I’d count it as a marriage ‘penalty’ since it’s more of an ‘accidental domestic partner loophole.’
But have you considered the different tax brackets ? Especially if your taxable income is not the same, chances are you will gain overall when the residual lower tax bracket of the “poorer” half of the couple can be used by the other half.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by Sandtrap »

123 wrote: Sat May 04, 2019 8:41 pm As two high-income individuals with careers as physicians I don't see much reason to marry until you decide to have children. You both can likely easily support your own household so just do a lot of visiting with each other and enjoy each other's company. Marriage introduces complications that can cause you to make career/job adjustments that you could otherwise avoid. As long as you get along well why complicate it with marriage?

A marriage can complicate the finances sometime long after the marriage has ended.
+1
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by Phinance »

Thank you all. What about transfer of money between partners?
My understanding is that a married couple can share $$ freely into each other’s bank accounts (even if not joint) without incurring a gift tax. I would assume, as non-married couple, I could only gift her 15K (as of 2019) prior to incurring a gift tax? I want to help her start a practice (50K start-up fund, I assume I cannot gift this without marriage?)
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by ResearchMed »

Phinance wrote: Sun May 05, 2019 2:14 pm Thank you all. What about transfer of money between partners?
My understanding is that a married couple can share $$ freely into each other’s bank accounts (even if not joint) without incurring a gift tax. I would assume, as non-married couple, I could only gift her 15K (as of 2019) prior to incurring a gift tax? I want to help her start a practice (50K start-up fund, I assume I cannot gift this without marriage?)
There is no gift tax due until one actually exceeds the estate tax amount.

What that 15k/pp/py means is that if you stay under that, no tax *form* needs to be filed.
Going above that, even by a lot, still doesn't trigger a tax now (unless you are talking about millions now).

It's paperwork for now, unless you expect it to total a *lot*.

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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by crit »

123 wrote: Sat May 04, 2019 8:41 pm As two high-income individuals with careers as physicians I don't see much reason to marry until you decide to have children.
I agree with this most of all, but:

My spouse and I married after 15 years together and already committed, mainly due to a health event and the realization of how that could have gone much much worse. We already lived in state/situation where I had added spouse to my health insurance (albeit paying taxes on the imputed income) when we needed to do so. We'd bought a home together, as joint tenants, with both of us on the mortgage. We're both secure financially to the point where if one of us died, the other would not be penniless or without resource; we did not have any kind of legal paperwork around death benefits (if it went to spouse's parents, I'm ok with that). So until anything goes wrong -- sure, it works fine to not be married, and you don't pay the tax penalty.

But having experienced the health event -- I am more aware now of the fact that we were treated by most caregivers (docs, nurses, etc) as a married couple with spouse as my, well, spouse at the time, even though that was not the case then. We just looked and acted the part, and they assumed. If things had gone pear-shaped and if there were family conflicts, that assumption could have caused real and substantial problems, actually. Including financially.

And socially speaking I am aware that other people don't look the part, and are assumed to be unrelated, and that is also unfortunate and wrong. So I can see the value of marriage in terms of defining things legally and clearly for the sake of everyone involved, and so that everyone can be treated fairly and correctly regardless of looking the (conventional) part or not. In other words -- the world is better for everyone when you don't rely on people to decide about you based on looks. But that is getting away from financial, so I'll stop.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by ResearchMed »

yeledbed wrote: Sat May 04, 2019 8:39 pm This makes me want to share my marriage story. We had been happily partnered for 12 years, with no plans for kids or marriage. I was actually fairly opposed to the concept of marriage, especially without kids. My partner suddenly grew so tired of his job, that he just couldn't take it anymore. He never earned that much money anyway, and my career was taking off. The year my annual bonus was more than his total annual earnings, he decided to quit. He needed health insurance, so we got married as cheaply as possible (by a local sheriff) and went on a week-long camping trip as our honeymoon.

The next week, when I returned to work, it was time to enroll for the following year's benefits. A new benefit being offered was health insurance for domestic partners. Turns out we didn't need to get married for the health insurance after all. 6 years later, we're happier than ever and I'm really glad we married. (And there's been financial benefits such as lower taxes since we're a single-income household.)

As others have said, if you plan to have children, it's probably a good idea to marry.
We are both laughing about this.
So similar :happy

We'd been together for quite some time (decades), on and off, and finally decided to move in together, rather late in life. DH found his dream home, and I turned my home into a rental, "just in case" it didn't work out, so I'd have a place to go, etc. It was working very well, so after about two years, we agreed that I should sell my house, so I could take the max $250k tax-free profit.

Then, one year later, I found out that my non-tenured position was no longer going to be eligible for health insurance the next academic year, after many, many years. (The rules had changed, alas).

So... we decided, "Time to get married after all!"
We planned a lovely ceremony with a very few immediate family members, across country, and had everything arranged at a favorite hotel.

Not long thereafter, I had a serious medical emergency, and suddenly needed very high risk surgery. :shock:
We had to cancel the wedding trip plans. My wedding gown was still being altered. (We both wanted a *very* small but very formal wedding.)

At almost the last minute, we looked at each other, and decided, "Just In Case" something happened... we wanted to be married...
(Per crit's post above, we also had always been treated "as though" we were spouses with respect to medical/hospital care, and we were already each other's health proxy and PoA's, etc. But we really wanted this *emotionally* now.)

We went to town hall and petitioned a Judge to waive the waiting period, and we had a license issued immediately.
We got to the hospital extra early, and asked them to page a Rabbi from Chaplain Services.
But I got called early, so the Rabbi caught up with us in the Pre-Op area.
The anaesthesiologist quipped (but seriously!) that she wouldn't drip in any mind altering substances until after the "ceremony".

We thus got married. :happy
Several other smiling hospital Chaplains (various religions) had gathered by the time of the marriage pronouncement. Apparently although there had been quite a few marriage IN the hospital, this was the first anyone could remember in the Pre-Op area.

A bit later, we called the hotel across country, and asked if we could "have the exact same wedding plans, but about 2 months later, please". We then had the previously planned ceremony.
The Rabbi ended things with, "I now re-pronounce you man and wife."

That was almost 15 years ago, and each year, we are happier and happier. It *is* different.
We also saved a lot in taxes, given a large difference in incomes, and even more so when I retired.

RM
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middistancerunner
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by middistancerunner »

Thesaints wrote: Sun May 05, 2019 1:42 pm
middistancerunner wrote: Sat May 04, 2019 8:11 pm
CoastalWinds wrote: Sat May 04, 2019 7:38 pm OP, could you elaborate on the marriage tax penalties you’re referring to? The new tax law helped eliminate the most obvious of these by making the brackets for MFJ double those of filing single.
Not OP, but I believe my partner and I would face a marriage penalty due to the new SALT limits, and could be relevant here.

Between state income and property taxes we each basically fill up the 10K SALT limit. Then we split $16,000 in mortgage interest between the two of us, so our total deduction is about $18,000 each, or $36,000 total, and $6,000 per person above and beyond our standard deductions.

If we were married it’s my understanding we would get 10K SALT together, plus $16,000 mortgage interest, so we’d only barely exceed the standard deduction of $24,000.

A more rare situation arises from the fact that he’s on my HDHP, and by dint of us both having a family HDHP, we both get to make a $7,000 HSA contribution. That is a pretty sweet deal that would go away if we married, though not sure I’d count it as a marriage ‘penalty’ since it’s more of an ‘accidental domestic partner loophole.’
But have you considered the different tax brackets ? Especially if your taxable income is not the same, chances are you will gain overall when the residual lower tax bracket of the “poorer” half of the couple can be used by the other half.
Yes I have considered it. We are currently in the same tax bracket (24) so this isn’t relevant.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by middistancerunner »

crit wrote: Sun May 05, 2019 2:30 pm
123 wrote: Sat May 04, 2019 8:41 pm As two high-income individuals with careers as physicians I don't see much reason to marry until you decide to have children.
I agree with this most of all, but:

My spouse and I married after 15 years together and already committed, mainly due to a health event and the realization of how that could have gone much much worse. We already lived in state/situation where I had added spouse to my health insurance (albeit paying taxes on the imputed income) when we needed to do so. We'd bought a home together, as joint tenants, with both of us on the mortgage. We're both secure financially to the point where if one of us died, the other would not be penniless or without resource; we did not have any kind of legal paperwork around death benefits (if it went to spouse's parents, I'm ok with that). So until anything goes wrong -- sure, it works fine to not be married, and you don't pay the tax penalty.

But having experienced the health event -- I am more aware now of the fact that we were treated by most caregivers (docs, nurses, etc) as a married couple with spouse as my, well, spouse at the time, even though that was not the case then. We just looked and acted the part, and they assumed. If things had gone pear-shaped and if there were family conflicts, that assumption could have caused real and substantial problems, actually. Including financially.

And socially speaking I am aware that other people don't look the part, and are assumed to be unrelated, and that is also unfortunate and wrong. So I can see the value of marriage in terms of defining things legally and clearly for the sake of everyone involved, and so that everyone can be treated fairly and correctly regardless of looking the (conventional) part or not. In other words -- the world is better for everyone when you don't rely on people to decide about you based on looks. But that is getting away from financial, so I'll stop.
I appreciate this comment a lot -thanks for posting. You sound like us, and the above reasons are exactly why we’ve started to think about it as we get older.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by whodidntante »

In your case, do not marry.
TheDDC
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by TheDDC »

Phinance wrote: Sat May 04, 2019 4:32 pm My fiancée and I are “new age” I suppose in that we were are considering living together as two high income people (both physicians) instead of marrying to avoid the marriage tax penalty. In addition, we have a significant net wealth difference (my>>her) which worries me if we marry then get divorced (do prenups even work?).

This now seems a little naive as I’ve learned of some of the other tangible financial perks of marriage (no gift tax>?, deductible health insurance, HSA contribution, estate planning, doubling amt of backdoor Roth per year, buying home, filing taxes, children custody if we have any). I’ve learned some of this as I was adding her to my employer’s health insurance (She is starting her own practice so will take some time before she ramps up income).

What do Bogleheads feel about the institution of marriage from a financial perspective? :D (Love and partnership is solid whether marriage or no marriage route, no commentary needed on this, only financial please)
Right. The problem is you seem to define marriage in a way that the natural law does not recognize, as however suits your fancy. I, for instance, do not recognize your premise of marriage as a pure financial construct, so there will be many who cannot comment on what we could consider an irregular and bastardized belief of marriage.

-TheDDC
Rules to wealth building: 75-80% VTSAX piled high and deep, 20-25% VTIAX, 0% given away to banks, minimize amount given to medical-industrial complex
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Phinance
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by Phinance »

These are incredibly helpful comments. I urge replies to please stick to financial aspects of marriage, our relationship is solid and needs no commentary (regardless of your beliefs about the institution of marriage).

PRE-NUP: There is currently a large (my>>her) difference in net worth along with debt (she has debt, I don’t). Our consideration of marriage is not naive and realizes that there are scenarios when things fall apart. She has agreed to getting a prenup that would stipulate: “All assets prior to marriage are separate, everything going forward/after marriage is 50/50”. Are prenups easy to obtain? are they expensive? ($1000?) I see websites (LegalZoom) that say you can create a prenup agreement online, would it be legally binding? I don’t mind ponying up :dollar to make sure a prenup document is done well (i.e. by an attorney) but just want to know if it’s necessary.
"Our life is frittered away by detail. Simplify, simplify." -Thoreau
Thesaints
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by Thesaints »

Phinance wrote: Sun May 05, 2019 6:04 pm She has agreed to getting a prenup that would stipulate: “All assets prior to marriage are separate, everything going forward/after marriage is 50/50”.
That's basically the law without a prenup...
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Phinance
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by Phinance »

Really? that’s perfect, so a PRENUP under our agreement is redundant? (I.e. I’m assuming the law says that assets prior to marriage are on NOT on the table if there is a divorce)
"Our life is frittered away by detail. Simplify, simplify." -Thoreau
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ResearchMed
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by ResearchMed »

Phinance wrote: Sun May 05, 2019 6:04 pm These are incredibly helpful comments. I urge replies to please stick to financial aspects of marriage, our relationship is solid and needs no commentary (regardless of your beliefs about the institution of marriage).

PRE-NUP: There is currently a large (my>>her) difference in net worth along with debt (she has debt, I don’t). Our consideration of marriage is not naive and realizes that there are scenarios when things fall apart. She has agreed to getting a prenup that would stipulate: “All assets prior to marriage are separate, everything going forward/after marriage is 50/50”. Are prenups easy to obtain? are they expensive? ($1000?) I see websites (LegalZoom) that say you can create a prenup agreement online, would it be legally binding? I don’t mind ponying up :dollar to make sure a prenup document is done well (i.e. by an attorney) but just want to know if it’s necessary.
If you want a pre-nup that will have a reasonable chance to hold up IF there is animosity (one never knows, especially if a marriage breaks down...) then you really should get an attorney, and have her get her *own* attorney - and not one associated with yours. And she should pay herself. In case of dispute, you don't want to add to the mix any claim that each person's attorney was somehow biased.

But it doesn't need to be fancy.
IF you think there might be children, then try to work that into the pre-nup, although it's hard to imagine precisely how that changes "life", including financially, until it's set in motion.

RM
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desi_kalle
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by desi_kalle »

Check my previous thread on this topic - 187591. With kids, the savings is much larger if you decide to do the 2x HOH and 2x DC-FSA route. In CA, the HOH filing also saves a bit vs MFJ. One other benefit is the EV CA rebate. The limit is $204k for HOH and $300k for MFJ. I'll be getting an additional $2500 this year that I would not have received if I was married.

Also, you get double the amount of mortgage deduction if you file 2x S/HOH instead of MFJ. This benefit is huge in HCOL areas such as CA. >750k mortgage is very common.
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by Thesaints »

As far as I know yes, but don't trust a stranger on the web; verify yourself. Also, there could be catches (inheritance and gifts received during marriage, for instance) which you may want to research.
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Phinance
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by Phinance »

What was the answer to the redundancy of a prenup? If all we want is the assertion “prior to marriage assets separate, after marriage 50/50” is it redundant to get a prenup because the law already assumes this?
"Our life is frittered away by detail. Simplify, simplify." -Thoreau
Thesaints
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by Thesaints »

Phinance wrote: Sun May 05, 2019 6:24 pm What was the answer to the redundancy of a prenup? If all we want is the assertion “prior to marriage assets separate, after marriage 50/50” is it redundant to get a prenup because the law already assumes this?
Before marriage, yes. After marriage, a qualified yes: there could be assets which still go to one of the spouses (inheritances/gifts) and the 50/50 apportionment is what generally happens unless one side objects. In such case the objecting side has the burden of convincing the judge why they deserve a larger share.
Verify it yourself; I'm not the one getting married.
protagonist
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Re: Marriage or No Marriage? (Home, children, HSA, IRA, etc.)

Post by protagonist »

From a purely financial standpoint, marriage is a terrible idea for the greater earner of a couple and a great idea for the lesser earner. Because 50% (or whatever) of marriages end in divorce. So if you are thinking purely in financial terms, and calculating odds, there is perhaps a 50-50 chance that the greater earner will lose a lot of money- on top of which is potential alimony . Forget about tax implications, etc....they are probably trivial compared with the above. It's hard to get around that one.

That said, we are looking at the issue from only a financial standpoint.
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