Newly ERd - Should I marry?

[TimSF]

After 22 years in the corporate law field, I have given notice and will be walking away from my career (IP attorney) end of July 2013. My question relates to whether or not, solely for financial reasons, I should marry my "DH" life partner of 14 years, especially in light of the fact that we will both need Obamacare in 2014. (Keep in mind that the possibility of marrying one's same sex partner in California and obtaining marital recognition under federal law has just become a reality.)

My financial stats:

IRA: 1 million
Taxable accounts: $150 (75% in cash)
Home equity: 1 - 1.5 million
I own a house in SF which we are in the process of selling. Transaction should be complete in October, at which time we will have an additional $1 million or so. We are moving to our second home in the country, which has a $190 k mortgage at 3.375 (15 years). We likely will pay off that home with proceeds from the sale of the SF home. Thus, after the sale, I will have about $1 m in taxable and $1 m in IRA. My "DH" has about $170 k in an IRA, but no savings. We jointly own the country home where we will be living shortly.

I do intend to work part-time in the future for interest and to supplement income, but only on my terms.

My DH and I have had very differential incomes in recent years. Me: $300K plus; him: $30 k. Thus, there may be a tax advantage to our marrying this year to capture favorable IRS treatment. However, my partner may be entitled to subsidies under Obamacare that my high income in 2012 and 2013 may make us ineligible for. There probably are other financial considerations concerning whether to marry or not. Just trying to begin to get my head around the issues. Any thoughts are welcome.

 

[Meadbh]

Congratulations on having the choice to make! I can't weigh in on the financial logistics, not being in the US, but it seems to me that the most important part of this decision is in your hearts.

 

[ERD50]

Congratulations on having the choice to make! I can't weigh in on the financial logistics, not being in the US, but it seems to me that the most important part of this decision is in your hearts.

For the financial side, run the numbers through some tax programs.

-ERD50

 

[Animorph]

After 22 years in the corporate law field, I have given notice and will be walking away from my career (IP attorney) end of July 2013. My question relates to whether or not, solely for financial reasons, I should marry my "DH" life partner of 14 years, especially in light of the fact that we will both need Obamacare in 2014. (Keep in mind that the possibility of marrying one's same sex partner in California and obtaining marital recognition under federal law has just become a reality.)

My financial stats:

IRA: 1 million
Taxable accounts: $150 (75% in cash)
Home equity: 1 - 1.5 million
I own a house in SF which we are in the process of selling. Transaction should be complete in October, at which time we will have an additional $1 million or so. We are moving to our second home in the country, which has a $190 k mortgage at 3.375 (15 years). We likely will pay off that home with proceeds from the sale of the SF home. Thus, after the sale, I will have about $1 m in taxable and $1 m in IRA. My "DH" has about $170 k in an IRA, but no savings. We jointly own the country home where we will be living shortly.

I do intend to work part-time in the future for interest and to supplement income, but only on my terms.

My DH and I have had very differential incomes in recent years. Me: $300K plus; him: $30 k. Thus, there may be a tax advantage to our marrying this year to capture favorable IRS treatment. However, my partner may be entitled to subsidies under Obamacare that my high income in 2012 and 2013 may make us ineligible for. There probably are other financial considerations concerning whether to marry or not. Just trying to begin to get my head around the issues. Any thoughts are welcome.

Your incomes might not be too different in the future. You'll have to run the numbers to see how the taxes and subsidies work out. Estate planning too, since spouses get special treatment.

 

[MichaelB]

After 22 years in the corporate law field, I have given notice and will be walking away from my career (IP attorney) end of July 2013. My question relates to whether or not, solely for financial reasons, I should marry my "DH" life partner of 14 years, especially in light of the fact that we will both need Obamacare in 2014. (Keep in mind that the possibility of marrying one's same sex partner in California and obtaining marital recognition under federal law has just become a reality.)

My financial stats:

IRA: 1 million
Taxable accounts: $150 (75% in cash)
Home equity: 1 - 1.5 million
I own a house in SF which we are in the process of selling. Transaction should be complete in October, at which time we will have an additional $1 million or so. We are moving to our second home in the country, which has a $190 k mortgage at 3.375 (15 years). We likely will pay off that home with proceeds from the sale of the SF home. Thus, after the sale, I will have about $1 m in taxable and $1 m in IRA. My "DH" has about $170 k in an IRA, but no savings. We jointly own the country home where we will be living shortly.

I do intend to work part-time in the future for interest and to supplement income, but only on my terms.

My DH and I have had very differential incomes in recent years. Me: $300K plus; him: $30 k. Thus, there may be a tax advantage to our marrying this year to capture favorable IRS treatment. However, my partner may be entitled to subsidies under Obamacare that my high income in 2012 and 2013 may make us ineligible for. There probably are other financial considerations concerning whether to marry or not. Just trying to begin to get my head around the issues. Any thoughts are welcome.

Congratulations on getting out of the rat race!

I'm not qualified to comment on the tax implications of married vs single beyond seconding what ERD wrote. Tax SW is your friend and lets you do lots of "what if" analysis. As for health care insurance, keep in mind that your eligibility for premium assistance will be based on your 2014 income, and if you are not working, you both may be eligible as individuals or joint. Your '12 & '13 incomes would delay getting the assistance upfront, but if your income next year is low enough you would still get it when you file your '14 taxes in 4/15

Do you have a good idea of your income in 2014?

 

[obgyn65]

+1

Congratulations on having the choice to make! I can't weigh in on the financial logistics, not being in the US, but it seems to me that the most important part of this decision is in your hearts.

 

[ER Eddie]

Half of marriages go south, so it might be worth considering a pre-nup or something to protect your assets, just in case. Getting divorced can be very expensive.

 

[Moemg]

Congratulations on having the choice to make! I can't weigh in on the financial logistics, not being in the US, but it seems to me that the most important part of this decision is in your hearts.

I have to agree with Meadbh on this subject !

 

[travelover]

..........Getting divorced can be very expensive.

 

[daylatedollarshort]

I have a relative that bought a house with her money, got divorced and her husband got half the house. I second what other posters have said about getting legal advice before you get married. Make sure you know what you are getting into financially. No one gets married thinking they will get divorced but that is what happens half the time, so be realistic.

I also second what others have said about the health care subsidies. What counts for 2014 for subsidies will be your will be your 2014 MAGI. So you will either need to talk to a tax expert or get a tax program and run the numbers yourself.

 

[pb4uski]

As others have said, Obamacare is probably not a good reason to get married but see any of the Obamacare calculators to see how you would fare individually or as a couple.

Also, given the great disparity in your wealth, definitely get a pre-nup to protect yourself in case things go sideways later on.

 

[Khufu]

By not marrying, your partner loses access to the spousal benefit of Social Security, one of the big advantages unfairly denied to same-sex couples in the past. I would guess that the risk of divorce for a couple that has been together for 14 years to be pretty low, although not zero. So, I would give that a low weighting in the decision.

 

[Ready]

Hi Tim,

Welcome to the forum. I can see by the questions you are asking that you have a good handle on the major topics to consider in contemplating marriage. My partner and I are going through the same thought process. Given your current disparity in income, you would benefit from filing your tax returns jointly. However, if your income drops down to almost nothing once retired, it may be a wash. Your partner will likely benefit from gaining access to your social security benefits. However, if you have income next year, he may lose a subsidy in health care.

And of course, there are the emotional reasons, and social reasons, to consider marriage. And, as someone else pointed out, given the disparity in income and wealth, the awkward topic of a prenuptial agreement should probably be discussed. 14 years is a long time, so you obviously know each other well. I've been with my partner for 18 years. But, as I'm reminded from time to time, marriages have lasted decades and then resulted in divorce, and divorce is very expensive. My parents just got divorced after 50 years of marriage, and the only ones who benefited from it were the lawyers. So, lots to consider...

Good luck with it, and with your newly founded ER freedom. I left my position two months ago, and while I'm doing some part time work now, I am getting my first taste of what life is like to not have to adhere to a daily work routine. And so far, it's fantastic!

 

[TimSF]

Thanks for your Responses

Good thoughts, one and all. I will look into whether some sort of prenup makes sense for our situation. I had assumed that the "separate property" rules in California would protect my separate assets brought to the marriage. And, yes, having been together already 14 years certainly grounds our relationship, but I know marriages of many more years than that do occasionally break up.
Thanks to those who pointed out that our 2014 incomes are what will ultimately matter for Obamacare subsidies. Everything is up for grabs right now, although since my partner is going back to nursing school next year (he is quite a bit younger than me) I likely will have more income (though modest income at best) than he.
I should have pointed originally that I am 50 years old - so SS considerations are a long way off yet.
As several suggested, I will run the tax numbers (TurboTax?) to see how much we might save in 2013.

What is "Tax SW"?

cheers

 

[Ready]

I think it was just a reference in general to the use of tax software for what if type analysis.

I use this web site quite a bit for doing the "what if I got married" analysis...

California Income Tax Brackets 2013

 

[Gumby]

TimSF -- I am so happy that this question is even possible for you. Those who have posted before me have been articulate and wise beyond my abilities to add or subtract. But do let me observe this -- marriage is like a garden full of beautiful flowers and abundant crops. One must constantly water and prune and tend that garden, lest the weeds invade and choke the life out of the flowers and crops. In some cases, it is very hard work. If you are ready to put in the time and effort to make your marriage bloom and prosper, then by all means do so. But never think that it will be "solely for financial reasons".

 

[chris2008]

I cannot advise on the financial consequences, but congratulations for having found the special someone who gives reason to consider marriage.

Yesterday we celebrated our 30th anniversary.

 

[Khufu]

I should have pointed originally that I am 50 years old - so SS considerations are a long way off yet.

cheers

SS considerations are not a long way off at all. There are various criteria for eligibility for benefits that depend on the length of the marriage. For instance, a spouse is entitled to the spousal benefit (normally 50%) of the other spouse's benefit) even if the couple has divorced as long as they were married for at least 10 years. Providing for your partner after a possible divorce in the future may not be high on your priority list, but I have seen wives whose standard of living dropped considerably because they did not wait another few months to divorce. I also know a couple that decided never to marry, one member of whom had a large income for many years. Now the other, low-income partner will never qualify for a spousal benefit even though they have been together for decades.

SS benefits are much more critical to the low income spouse and cost the high income spouse nothing.

 

[Sarah S]

Late to this thread but aside from marriage being a matter of the heart while I agree that ss even at your age should be a thought and a gift to your other half I wonder if marriage will limit his access to financial aid for nursing school?

 

[TimSF]

Thanks for the good wishes. And Khufu and Nikki, excellent issues to raise that I hadn't thought of, but should throw into the mix.
What a thoughtful, helpful community on this blog!