Wedding Bills - Brief Article

Kiplinger's Personal Finance Magazine, June, 2001 by Elizabeth Razzi

It's part of the wedding. No Sicilian can refuse any request on his daughter's wedding day. --The Godfather (1972)

Well, most weddings aren't quite that expensive. But once you add up the rings, clothes, flowers, photos, music, invitations, limousine, reception and other details, the average wedding-day epic costs a heart-stopping $19,000.

Not long ago, the father of the bride was expected to foot the whole bill. That's still what happens in about 19% of weddings, according to Millie Martini Bratten, editor in chief of Bride's magazine. But 30% of the time, the bride and groom pay their own way. And in half of all weddings, the costs are shared among the bride and groom and their families.

When Minda Martin, a 27-year-old administrative assistant, and Steve Zwerin, a 28-year-old lawyer, exchange vows in Seattle this July, they expect to be joined by about 150 guests--80% of whom are coming from out of town. "The number grows all the time," notes Minda. "People have surprised us by making this a mini summer vacation."

Minda and Steve will have a traditional ceremony, followed by cocktails, dinner and dancing to a seven-piece band in a private club with sweeping views of Seattle and Puget Sound. Minda will wear a strapless silk-and-satin gown that cost her a little less than $4,000. The rest of the expenses, totaling roughly $25,000, are being picked up by Steve's parents.

Minda admits that some members of her family are uncomfortable with the scale of the wedding. "My future in-laws are extremely generous. But my family is not in the same financial situation. They felt they should be doing more for their daughter, but I certainly don't feel that way."

Steve Garrett, manager of financial planning for A.G. Edwards & Sons, usually sees wedding planning from the perspective of the parents, who tell him they need to keep extra assets in cash. "We'll budget $20,000 or $30,000 or $40,000," he says, "and they'll start taking it in pieces."

One strategy he sometimes recommends is that clients leave their investments intact and set up a tax-deductible home-equity line of credit. "You can tap that and let your assets continue to grow," he says.

Garrett also suggests that parents give stock to a child, moving the tax liability from the parents' bracket to the child's lower one. Here's where today's long engagements--driven in part by the high cost of weddings--can work to your advantage. If parents make the gift before the year the wedding occurs, it is subject to the child's tax rate, filing as a single person. Take, for example, stock that parents bought at least five years ago for $5,000 but that is now valued at $20,000. If they sold it, they would owe tax on a $15,000 gain at the 20% capital-gains rate, leaving $17,000 for wedding expenses.

Now assume they give the shares to their daughter, who sells them. If her taxable income, including the $15,000 gain, is less than $27,050, she will pay only 8% tax on the stock sale--making Uncle Sam kick in $1,800 toward the wedding. (The strategy could also work in the year of the wedding, if the new couple's taxable income is no more than $45,200.)

The easy way out. If it all gets to be too much, you could give up the big wedding and flee the country, as Angie Gainous, 27, and Greg Viar, 28, will do in July. They had been planning to pay all the expenses of a traditional wedding, including a reception for 200 at a luxury hotel outside Washington, D.C. Angie had even signed a contract. But then she found out that extras, such as meals for band members and valet parking, would bump up the price from $22,000 to nearly $30,000. "The more I thought about it, the more it was becoming a burden instead of fun," Angie says.

So she made Greg an offer he couldn't refuse: They broke the contract with the hotel (forfeiting $2,000 in deposits) and moved the wedding to an all-inclusive resort in Jamaica, where they were planning to honeymoon anyway. The couple is paying one relative's way to Jamaica, where they will be joined by 15 other guests, and still they expect to save $20,000.

After they get home, they'll celebrate with a casual party for the 200 people who couldn't make the trip. Greg's parents will host the party in lieu of the rehearsal dinner they had planned. And Angie and Greg have already found a good use for that $20,000: They made a down payment this spring on their first home. --Reporter: CHRISTINE PULFREY

POLL | Indebted to you

How deeply did you go into debt for
your wedding?

Didn't use credit   60%
Less than $5,000    12
$5,000-$10,000       7
$10,000-$15,000      4
More than $15,000   17

SOURCE: Kiplinger.com online poll, March 2001
POLL | Paying the piper

Who do you think should pay the
lion's share of wedding costs?

The couple      35%
Her parents     27
His parents      1
A combination   37

SOURCE: Kiplinger.com online poll, March 2001