Combining assets after marriage

In My Humble Opinion
1

Looking for factual answers.

I’m getting married in TWO MONTHS evidently…

We both have good jobs making over $40,000. Her situation is pretty simple. Her only asset and debt is her vehicle. She manages her money very well.

My situation is a bit more complicated. My dad passed away six years ago and I got a pretty good chunk of change through inheritance and life insurance.

My house is paid for. I also farm part time. I own 290 acres on mortgage. I also have about $150,000 worth of equipment that I owe about $30,000 on.

We are looking forward to combining things when we get married. Originally we had thought it would be best to keep everything separate, since I run a business.

She had brought up the fact that maybe we should each contribute a little bit to a joint checking account of sorts so that we can buy stuff together, completely.

An idea hit me the other night that why don’t we just combine everything. All of my debt and assets and all of her debt and assets.

Then both of our day job paychecks would go into a joint account and all of the proceeds from me selling grain would as well. Then we could make land mortgage payments from the joint account as well.

It would definitely simplify things.

NOW, are there tax advantages to doing it this way? Also, would we see any advantage when it comes to borrowing money for future real estate/equipment purchases?

She grew up on a farm too, and we talk about it a lot so she is well aware of the expenses that come into play in farming.

As a disclaimer to the cynical knothead that is going to spit out the old “boy, you’re pretty wet behind the ears, I wouldn’t trust anyone with that much or even get married” adage, please save your breath.

2

What state are you in? In some states, aspects of this are mandated. For instance, it could be that everything you earn or buy after getting married is split half-sies automatically.

3

South Dakota

4

And as far as I know we have no laws mandating situations like this.

5

In general, your property is your property. In many states, it may become half hers without you doing anything other than getting married, but probably not SDAK. I suggest keeping things simple: don’t put her on the deed for everything. If things don’t work out, you’ll want to retain ownership of the things that were yours before your marriage, and none of that affects income taxes anyway.

If you want to combine income, good for you. I did that when I got married and 27 years later it’s still working.

IIRC, it’s pretty much a wash whether you file jointly or file a separately, especially when you’re both making about the same amount.

You should look into incorporating the business – talk to a lawyer where you live. This not only protects you, it protects HER. If your business gets sued, would you like to see her lose any savings or equity that she has built up in anything?

6

I would try to separate the business from your personal estate. But my wife and I have had everything joint for 50+ and it works for us.

7

My wife and I combined all assets when we got married, but then 0 + 0 is easier to do. : )

I don’t think you have to “do” anything, just treat all your debts and assets as if you are in a joint partnership.

8

I think that you need to talk to a lawyer. They can advise you about the tax situation and the business. It may be that, for example, your business should employ your wife as a part time bookkeeper. You also need to consider what happens further down the line - are children a possibility?

9

My husband and I did not combine assets after marriage and it was one of the best decisions we ever made. We both contribute to a joint checking for the mortgage, bills, etc but retain everything else in our own personal accounts. We have never fought about money, ever. If he wants it, he buys it with his own money and vice versa. It completely eliminates the whole “why are you spending so much” and “how could you buy that without asking me” arguments.

10

This. The number one issue couples argue over is money.
Also, the house is yours but anything you are currently paying a mortgage on will be half hers automatically. [Or it would be if you all ever got divorced]
Also, divorce is a very real thing. Last I checked it was something like 50%. It would be irresponsible of you (or anyone) to not consider that as a possible future.

11

It’s good advice to consider the possibility of divorce, but the divorce rate depends on a lot of factors. Things like age, length of engagement, number of previous marriages, income levels, religious background, etc. The divorce rate appears much higher if you’re looking at young couples with low income vs an older couple with moderate-to-high income.

12

Another vote for lawyer - and fast.
If you are not certain of your state’s laws regarding community property, you really need a crash course.
Then there is the pre-nup - how old are you, is this your first marriage, etc. A per-nuptial agreement typically says "regardless of the the State’s default rules, we choose to retain X, Y, and Z as separate properties and, in event of divorce, we both walk away with what we came in with.
In the even of the farm going belly-up, her assets remain intact. This is also where you decide how you will hold future acquisitions - will that be his, hers, or theirs (joint ownership).

See a lawyer. Last year.

13

If you’re running a business you need to talk to a lawyer. Giving tax advice in a situation like yours over the internet isn’t a good idea given how many variables can come into play. There are ways to shield her from possible business problems. There are pros and cons to combing or not combining everything that can’t really be hashed out on a message board like this. It would be well worth your time to consult a professional about your situation so you can come up with something of maximum advantage to both of you.

14

One further piece of advice is to keep at least some personal money. My wife (38 years and counting) and I have shared everything from day one, but we both have a modest savings account which is part emergency reserve and part somewhere to buy presents from. Somehow, buying your spouse a present out of a joint account is not the same.

15

If you live in a community property state, it is still possible to keep some of your assets segregated. An inheritance, for example, is considered to be the property of the individual who received the legacy. However, that must be asserted at the outset. If a spouse inherits some money, and deposits in their joint account, it is presumed to have been designated as community property, and cannot be protected at a later date as an individual asset.

16

Or it could definitely complicate things.
Seriously.
Your life is about to change in the most important way possible. So, first of all let’s face the important stuff: Congratulations!!!

But you need a lawyer. Now.

You may need to meet with him more than once. First time, to explain your situation to him and hear his pro and cons. Then you’ll probably need to take the lawyer’s information, go home and sit down with your beloved to make important decisions that will affect you for the rest of your lives. Then go back to the lawyer and explain to him what you have decided, and give him time to print it all up legally. Then meet again to sign the papers.

Start now…you’ve only got 59 days left.
This is going to take a lot more work than choosing a wedding gown and making the guest list.

17

My Wife and I have been married for 18 years. Never combined anything. Well, I did put her name on the deed to the house.

I pay some bills, she pays some others. If one of us has something expensive they need to buy, we adjust the bills, or out and out help save up for it. Easy peasy. Never had any kind of argument, about money, or anything else.

18

I had a similar sitution in Ca. We had a joint checking and savings but I kept my assets registered as they were prior to marriage. We divorced after 5 years and any assets including appreciation on assets that I was making payments on were split 50/50. Assets I had prior to marriage that were allready paid off and producing no income or expenses beyond property taxes were not included. The lawyers handles all the details so I am not sure if this was based strictly on law or an aggreement we came to.

19

In Michigan (unless it has changed), pre-nups are not legal contracts because they stipulate breaking another contract (marriage). However, they do serve as affidavits of intent. Of course, they’re not very romantic and in the spirit of the thing. I didn’t bother with one. I’m an ‘in for a penny, in for a pound’ kind of guy. But still, separate the business.

BTW, this should be in IMHO, not GQ. Reported for a change. The OP included a factual question (does it affect taxes) but even then it’s more suited for IMHO.

20

The 50% divorce rate is one of those myths that just won’t go away, no matter how often it’s been debunked.

http://psychcentral.com/lib/the-myth-of-the-high-rate-of-divorce/00011473

I Don't: 5 Myths About Marriage | Weddings & Divorce | Live Science (Warning:slideshow)