Paying For Your Child’s Wedding

OCEAN CITY – Weddings can be wonderful, emotional, memorable events — and they’re even more so when the apple of your eye is making the vows. On such momentous occasions, you simply want your child to be happy and to support him or her in every way possible — including financially.

But as we all know, nuptials aren’t exactly inexpensive — the average cost of a wedding today is in the neighborhood of $24,000.

A good first step, as you figure out how to afford an upcoming wedding, is to determine the extent of your financial responsibility. Don’t assume that the traditional funding model — parents of the bride paying for the wedding, while parents of the groom pay for the rehearsal dinner and honeymoon — still applies.

One reason for this new division of financial responsibilities is that nowadays many couples are waiting longer to get married and can afford to foot some or all of the expenses themselves. And if one or both of the partners are heading down the aisle for the second time, they may be more willing to take financial responsibility.

"There is less concern now about etiquette and protocol when it comes to who pays for what," says Scott Cooper, Managing Director of Merrill Lynch’s Wealth Structuring Group. "It’s more about who can afford what."

Splitting the bill may appear to be a blessing, but "it can also be like Congress deliberating on the national budget," says Cooper, noting that each person with a financial stake may feel entitled to control the details. Therefore, you should communicate early and often with your son or daughter. You’ll want to get a good sense of the couple’s hopes and expectations and be clear about how much you’re willing and able to pitch in.

In what may be a boon to your assets, simpler, scaled-down weddings have come into vogue as a result of the recession. Deborah Moody, director of the Association of Certified Professional Wedding Consultants, says brides are more practical and less elaborate with spending decisions for dresses, flower arrangements and meals. "Five years ago you might have invited 300 guests, but today couples are inviting people who are most important to them," says Moody.

"Even some very wealthy clients are planning simple weddings to lessen the impact on the environment," says Stacy Allred, Managing Director of Merrill Lynch’s Wealth Structuring Group.

If the expected marriage is two or more years away, you might want to consider investing in a portfolio of stocks and bonds designed to provide potential growth returns. For a wedding less than a year away, you may opt to add new assets in risk-averse investments such as FDIC-insured CDs or a bank savings account. Whether you open a separate account in your child’s name or bundle the contributions into your own existing accounts depends on your relationship with your child. You should always discuss tax and gift consequences with a tax professional and legal advisor.

In the end, a proper plan and clear communication can make all the difference.

"Today’s wedding is all about deciding on the most important elements that will define that special day," says Moody. "Once you recognize what memories will stay with you, you can spend accordingly." And, most important, you can help your children start their new lives with joy.

(A Merrill Lynch Wealth Management Advisor. She can be reached at 410-213-8520.)