Planning your finances for marriage How to prepare for "I do"

Protection review

Life insurance is the form of personal protection that most people have considered.[1] It is understandable that you would want to know that your spouse and family would be cared for financially in the event of your death. Often this is linked to a liability, such as a mortgage, giving you peace of mind that the debt would be cleared in the event of you passing. For this reason, there’s a good chance it will form a valuable part of your financial planning. However, it is not the only insurance couples should consider.

Statistically, there is a much greater chance of being off work due to ill health or accident compared with the chance of early death for those of working age.[2] Additionally, as there is a need to service the cost of the premiums for your life insurance, protecting your income is an important consideration. For a couple embarking on a new life together, with mortgage costs and maybe a family now or in the future, a loss of income during the working years could have a catastrophic impact on their quality of life. It could also stop them saving for the future, having further impact on their retirement years.

Whilst some employers do offer sick pay schemes, the level of cover varies, and these benefits are discretionary. Moving jobs may result in a gap in the cover being offered or even moving to an employer where the default is Statutory Sick Pay, currently £118.75 per week[3]. Taking out income protection (i.e. private sick pay), can ensure you have sufficient cover regardless of your employer’s policy or if you move jobs. Some providers also offer the option to change the level of cover (within specified limits and without additional underwriting) in response to changes in your life, such as income increasing.

An income protection scheme could ensure you can continue to maintain your income even in the event of being off work for a sustained period due to ill health. It could allow the bills to continue being paid, savings to continue being funded and the premiums on other vital insurances to be maintained. Given the average age of a claim on Income Protection was 38, based on a 2023 study by Royal London[4], this is likely to be a key stage in your married life, with mortgage costs, childcare and education costs all common at this age.

In addition to income protection, there are other forms of protection such as critical illness, designed to pay a lump sum on diagnosis of a specific list of conditions, and family income plans, that can provide a continuing source of income in the event of death.

Working with a financial planner can ensure you have in place the correct forms of protection to allow you to enjoy your lives together, with the knowledge you and your family have a secure future.

Reviewing your financial goals

Whilst the initial focus may be on the wedding day itself, this will soon shift to how you see your future lives together. This may include big goals such as property moves, raising a family and eventually your retirement. Reviewing the assets you have accumulated pre-marriage and understanding how those and any future savings should be allocated to meet your goals should form an important discussion about your future lives together. A financial planner can support you with these discussions and advise you on a suitable savings plan for your future needs.

Wills

It is important to remember that any Will in existence will be revoked on marriage unless it was drafted in anticipation of that marriage.[5]

Many couples may not have a Will in place when they marry, but marriage is an ideal time to consider creating or updating one. Increasingly, couples have purchased property ahead of getting married and so there can be significant financial assets to consider.[6] Even if the wishes are simple, having a Will can ease the estate administration process and leaves no doubt as to your wishes regarding the distribution of your assets.

The concept of a blended family, where couples have children from prior relationships is becoming more common.[7] This means the distribution of assets on death may need some additional structuring to protect both the surviving spouse and the deceased partner’s previous relationship. A well drafted Will can be used to achieve both aims.

Nominations on your pensions and life cover benefits should also be reviewed, as these are not covered by your Will. Instead, they are typically paid out according to the beneficiary nominations you’ve made with the provider. Ensuring these are up to date helps make sure the benefits go to the right people in the event of your death.

Powers of Attorney

Equally as important as having a Will, but often overlooked, is putting a Power of Attorney (POA) in place. While a standard POA can be useful in temporary situations, such as if you’re travelling or recovering from an illness, a Lasting Power of Attorney (LPA) offers longer term protection. It allows someone you trust, such as your spouse, a family member or a friend, to make decisions on your behalf if you lose mental capacity in the future.

If over the age of 18, you should have an LPA. That may seem like a strong statement but once you turn 18, no one has the legal authority to act on your behalf in the event of a loss of mental unless appointed under an LPA or by a Court Order. Being married is no exception.

There are two forms of LPA, ‘Property and Financial Affairs’ and ‘Health and Welfare’. The Health and Welfare LPA, by contrast, can only be used if you lose the capacity to make decisions for yourself. It enables your attorney to make choices about medical treatment, care arrangements, and even life sustaining treatment, in line with your preferences.

An LPA will allow for continued access to accounts if you are not able to manage them yourself. Remember that a loss of capacity can be temporary, you could be unwell or in an accident. An LPA could allow your spouse to continue to access the relevant accounts to keep the house running and pay the bills.

Managing money in marriage

Whilst these may not be the most glamourous items to be thinking about ahead of your wedding, their impact could quite literally last a lifetime. When you are looking at your wedding planning agenda, do make some space for a bit of time with professionals who can make sure your financial and legal affairs are in order. Setting part of your wedding budget aside for this advice could make a big difference to your future lives if something unexpected were to happen.