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Tying the Knot Finances

Young couple with giftThe average age of a couple getting married today is older: age 31 for a man and 29 for a woman. This often means merging two households. CBS Boston says that if you both own your own home, you may want to think about selling them and buying one jointly, according to its recent article “Couples & Money: Ours? His? Hers?”
If you go ahead and sell one home and move into the other, you need to decide ownership issues. Will you add your new spouse to the deed and add him or her to the mortgage as a responsible party?
Another thing to consider is that marriage doesn’t automatically combine your credit reports. If one spouse has a poor credit report and is getting out of debt, you may want to keep things separate. If you do want to purchase a house in the future, you’ll have one good credit report and one good credit score. If you bring credit card debt or school loans into your marriage, you’re responsible for paying that off yourself.
As far as banking, think about a joint checking account for household expenses and savings. However, you should keep your individual checking accounts if you’re both working, so then you’ll have your own money.
Keep your own credit card, but know that you’re responsible for the payments. You may want to have a joint card for the household purchases.
Any assets you bring into the marriage—like stocks, bonds, mutual funds, and savings—should be kept in your individual accounts. You can talk about using joint accounts for your future goals and tapping into your individual accounts to help you achieve those goals.
Make certain that you’re both taking advantage of retirement plans when available from your employer. Contribute the maximum you can afford.
As far as beneficiary designations, ensure that your spouse inherits your life insurance, IRAs, retirement plans, pensions, and annuities by updating the beneficiary designations. Review your health insurance policies to see who has the better insurance. And finally, you need to redo your estate planning now that you are married.
Reference: CBS Boston (June 8, 2016) “Couples & Money: Ours? His? Hers?”

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Avoiding Escheatment

Bigstock-The-words-Own-It-on-a-branding-50996468The process by which a state government claims ownership of a deceased person's accounts who has no heirs or beneficiaries is called escheatment. It is something that everyone needs to know how to avoid to make sure their accounts are not inadvertently seized while they are still alive.

If a person passes away and no beneficiaries or heirs can be found, then the state government will claim the property for itself. Today many state governments continuously experience revenue shortfalls and this has led some of them to be overly eager and aggressive about claiming property through escheatment.

What often happens is that an account holder has not stayed in contact with a brokerage or financial institute for a long time. The financial institute then reports the assets in an account as unclaimed property. Rather than making any effort to locate the person who owns the account, the government claims the property as its own. This can create issues for people who have long term investments as part of their retirement and estate plans.

Recently, Investopedia listed how you can avoid this happening to your stock accounts in "4 Ways to Avoid Escheatment of a Stock Account."

The tips include:

  • Make regular contact with the brokerage even if it is just to speak to a representative.
  • Cash all dividend checks. Even if you think the amount of the dividend is too small to bother with, cash the check so that the brokerage knows a living person is receiving the checks.
  • Complete any proxy voting paperwork even if you do not care about it, as this will show that you are still alive.
  • Update contact information when it changes so that the brokerage knows how to get in touch with you.

If you follow the above steps, then your estate will not find itself in the position of the government having already claimed your assets through escheatment before the assets could be distributed to your heirs.

An experience estate planning attorney help you avoid escheatment by having appropriate default heirs listed in your estate plan.

For more information about estate planning, please visit my estate planning website.

Reference: Investopedia (October 29, 2015) "4 Ways to Avoid Escheatment of a Stock Account."

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