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Friday June 14, 2002

Couples should discuss W-2s before exchanging their 'I do's'

BOB SCALLY
Copley News Service

Love may bring couples together, but realities like money can wreck a marriage.

"Marriage is pre-eminently a contract and most people don't realize that. They think they're marrying for love, and in fact, they sign a legal contract about property," says Canadian sociologist Margrit Eichler of Ontario.

The most important responsibility that couples should undertake is to talk about money before the wedding day, financial advisers agree. There should be no mystery about how much money they make, how they like to spend it, how they save it and how they plan to spend it during the marriage.

Couples must decide who will buy the groceries, and who will pay the rent, and out of what funds they will pay the bills. With more than 2.4 million couples getting married each year in the U.S., that's nearly 5 million checking accounts that need to be discussed.

Advisers say there is no single right answer for how couples should set up their finances when they merge lives.

Prenuptial agreements are not the answer for most couples. The premarital contracts basically spell out the assets of the individuals as they enter a marriage. Trendy among celebrities, they can be helpful for regular people who have accumulated lots of assets, according to financial planners from the accounting firm Deloitte & Touche.

While talking seriously about money is crucial, financial issues should not be foremost in a marriage either, according to San Diego financial planner Cheryl Rawling. She advises couples conceptualize how they would like their lives together to work.

From there, she said, financial advisers will structure the tax and money issues around that goal.

Certainly if people let finances alone rule matters of the heart, they would never get married. One accountant admitted that he calculated the most financially advantageous day to get married -- Jan. 2.

But in his defense, the CPA notes that if he was totally looking for the best financial angle, he wouldn't get married at all but simply live with his beloved, to avoid the so-called marriage penalty tax.

What politicians like to call the "marriage tax" is what happens when two incomes combine into one, thereby rising to a higher tax bracket. The IRS considers their money to be theirs, even if the husband and wife keep separate accounts.

A married couple, for instance, making a joint income of $100,000 would pay approximately $21,225 in federal taxes. If the two made $50,000 and simply lived together, they would pay $8,570 apiece -- about 23 percent less.

"It's a system set up from the old days of 'Leave it to Beaver' when wives stayed home and husbands worked so there was only one income," said Rich Richoff, a California accountant.

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