Of course, decisions about marriage are based more on feelings of love and need for companionship and security than on legal and financial concerns. But marriage has legal and financial consequences that should be considered, especially in the case of later-in-life marriages. Here are some of the issues to consider:

• Effect on Social Security benefits.
• Effect on alimony you may be receiving from a prior spouse.
• The legal obligation of support for your new spouse.
• Your new spouse’s right to inherit a portion of your property.
• Your assets will be counted in determining your new spouse’s eligibility for Medicaid, and vice versa.
• What effects this might have on your children’s inheritance.

Put it in Writing

We would advise never getting married for a second time, or even moving in with someone, without a written agreement about what you intend in terms of financial support for one another and what will happen if you were to break up or one of you were to fall ill or pass away. There are several reasons to put your intentions down in writing, including:

• The act of writing down your thoughts on paper will raise questions and issues you may not otherwise consider. For example, if your new spouse moves into your house, what happens if you pass away or become incapacitated and can no longer live there?
• You will have to come to an agreement on the answers to the questions you raise in order to put them in writing.
• Memories fade or change over time. The written agreement can remind you what you had in mind years ago.
• And there’s always those pesky kids, who may have different thoughts about what should happen than you do. Showing them an agreement can show what you had in mind, even if years in the future you are no longer able to state those wishes yourself.

Anything you write down can be changed later if the circumstances change. A 10-year relationship is very different from a one-year one.

Prenuptial Agreement

We would always advise consulting legal counsel prior to a second marriage to prepare a prenuptial or antenuptial (the same thing) agreement.  It will make sure that both of you are on the same page and you and your families are protected. Most legal and financial rights can be waived in a prenuptial agreement, but the agreement can be challenged if the prospective spouses did not provide each other with full financial disclosure.  Through careful planning, you can protect your own interests as well as those of your partner and your respective children, regardless of whether you ultimately decide to tie the knot.

Different Scenarios

Here’s how this all could work:

The Jorgensons

After 30 rocky years of marriage, the Jorgensons decide that it’s time to go their separate ways. Of course, two separately can’t live as cheaply as two together. After they split their assets more or less equally, they are as follows:

                                                       John                             Joyce

Income (annual)                      $75,000                       $50,000

Savings and Investments

Checking                                  $10,000                       $5,000

Savings                                     $15,000                       $20,000

Investments                             $35,000                       $100,000

IRA                                           $200,000                     $125,000

Total                                        $260,000                     $250,000

Condominium                         $200,000                     $200,000

John agrees to pay Joyce alimony of $1,000 a month for 10 years. Both John and Joyce expect to keep working for at least another 10 years, until they’re both 70 and can get their full Social Security retirement benefits.

Not too long after the divorce is finalized, both John and Joyce meet new partners and eventually move in with them. John’s new partner, Martha, has three children of her own and has financial resources more or less equivalent to John’s. Joyce’s new partner, George, has no children and far greater resources than Joyce (children are expensive). But he is close to various nieces and nephews.

John and Martha decide not to get married and to keep their finances separate, sharing a single checking account to cover living and housing expenses. They move into a new, larger condominium that is in joint names, which means that it will pass to the survivor of the two of them. So they also update their wills to direct that when the second passes away, the condo will be sold and the proceeds split among all six of their children. Their lawyer advises them that this is risky since the surviving partner could always change his or her will or sell the condo and commingle the proceeds with his or her other funds so that they pass exclusively to his or her children. He recommends that instead, they put the condominium into a trust that would make sure that the proceeds ultimately will be split six ways. John and Martha, however, reject this option, being put off by the complexity of the trust and the higher legal fees involved with a trust. They trust one another and decide to take their chances.

Joyce and George, on the other hand, do get married. But they enter into a prenuptial agreement that provides that in the event of divorce, they will each leave with what they brought into the marriage and they keep their finances separate. Joyce’s estate plan continues to give her assets to her children. George’s leaves his assets in trust for Joyce for her life with the remainder at her death split between her children and his nieces and nephews. They both purchase long-term care insurance.

 

Related Articles:

Life (and Planning) Can Get Complicated

How Can Unmarried Couple Protect Financial Security of Surviving Partner?

Why Prenuptial Agreements are Necessary in Second Marriages

Planning for the Second (or Third or Fourth?) Marriage or Relationship