Couples: Keep two accounts. That's one of six divorce prevetion tips from a national accounting group. With 2.5 million people filing for the divorce each year in the U.S., roughly 57 percent of the splits are prompted by financial arguments, according to a national CPA trade group.
To help prevent fiscal fallout in marriage, the AICPA National CPA Financial Literacy Commission has put together a financial marriage check list, designed for engaged couples and helpful for already-married pairs. The group's website features a menu of milestone events. Click on the couples and marriage tab for additional info.
Here is the check list from the CPA organization:
1. "Be honest
Go ahead, show your financial warts! And start with your credit report. Everyone has baggage when it comes to their finances. It could be that pesky old credit card debt or your student loans.
After all, these problems will be a burden shared by both of you. While you’re at it, share information on your spending habits and any other financial commitments you may have made to others in the past.
2. Keep at least two accounts
It may be a good idea to have a pot of money shared between the two of you to be used for paying the household bills. And each spouse should be able to take over the joint account. This way, one person isn't stuck paying the bills all the time. And of course, you may want to keep some discretionary cash on the side.
This way you'll both share responsibility for the daily expenses, while also keeping a budget for things you enjoy. At the end of the day we could all use a bit of autonomy.
3. Beware of joint filing risks
Of course there are a lot of benefits to filing jointly - tax breaks for one. But if you have concerns about your spouse's credit history, you may want to take some precautions. Once you file jointly, you're just as liable.
For example, if your partner is called upon to increase alimony payments or child support and is dragged into court, your own tax return will be scrutinized. If your husband or wife underreports income, you'll be jointly liable and that means all the penalty and taxes will fall on your shoulders.
You can get relief from joint liability if you apply for innocent spouse status to the IRS, but it can be very hard to prove according to Consumer Reports. In fact, the IRS grants less than 3 in 10 requests for innocent spouse.
4. List your assets
If you've been married for a while, it's natural to forget who owns what. But it's always a good idea to list what you have and then determine how you want it to be distributed after your death.
Unless it's specifically stated in a will or a living trust, your assets might all go to your spouse. If you're in a second marriage, you want to pay specific attention to this. If you want to leave your property to your kids from the first marriage, it's something that needs to be spelled out since your assets may automatically go to your spouse.
5. Be 401(k) savvy
Your 401(k) plans are yours. But make sure you know the strengths and weaknesses of each of your retirement plans so you can balance out each others investments.
Plans may have different matching contributions, and investment options.
It's likely that one partner is more conservative and the other is more aggressive, but the takeaway is that the whole retirement pot is allocated properly.
6. Do additional research
Check out the AICPA’s free Web site on personal finance topics to help your family better manage their finances such as strategies couples should consider. This free Web site can be accessed at: www.360financialliteracy.org"
There are other sources out there as well. For example, Sally of Through a Glass Darkly has written some insightful posts about love, couples and money, with helpful links on the subject.