About one-third of U.S. residents ages 15 and older have been married at least twice, according to the U.S. Census Bureau’s American Community Survey. Remarriage among American ages 55 and older is on the rise, while their younger counterparts are becoming less likely to have remarried.
Remarrying later in life can create several complex financial, legal, and emotional matters that should be addressed.
- Be candid about your financial situation. Couples who are marrying for the second (or more) time often have financial baggage. To avoid problems later in the marriage, talk openly and honestly about assets, debts and obligations you may have. If you find you are not on the same page and are avoiding bringing up complicated issues, ask a financial representative to help mediate your discussion and provide a neutral perspective.
Consider the following questions:
- What financial obligations do we have that we will bring to our marriage?
- What are our credit scores?
- What are our financial obligations (alimony, child support) to our former spouse(s)?
- Will we pool our finances completely, partially or not at all?
- Where will we live – your place, my place or a new place we buy together?
- How will our marriage affect college financial aid for our children from previous marriages/relationships?
- Update life insurance, medical directives and beneficiary designations. Otherwise, if you or your spouse dies and beneficiaries were never updated, a significant part of your estate could go directly to a previous spouse, with no legal recourse. If you and your spouse have living wills, health care powers of attorney or medical directives, review them with your attorney to ensure these documents reflect your current wishes.
- Think about how remarriage affects your retirement planning. Remarriage can affect a variety of benefits your partner may be receiving, such as a deceased spouse’s social security benefits or pension payments. Some divorce settlements stipulate that retirement benefits be split with an ex-spouse. If you die first, then your current spouse might have to split survivor benefits with your ex-spouse.
- Consider drafting a prenuptial (or postnuptial) agreement. They make even more sense if you have assets you want to preserve for children from a previous marriage, you own a business you want to keep in the family, or have endured a costly divorce and don’t want to risk that again. Consider including your adult children in the conversation; this helps with their buy-in. Prenuptial agreements should be done by an experienced attorney.
- Discuss estate planning with your investment representative and attorney. Subsequent marriages can affect estate plans and are a common concern among older couples. They are more likely than younger newlyweds to bring property and other valuables into the relationship and they may want them to go to children from a prior marriage. Talk about your long-term goals, including how you may want to support each other and what you hope to provide your children (biological and step), or to other family members.
Starting over with a new partner is wonderful, even when the new marriage introduces complex financial considerations. Communication, as always, is the key to long-term success. FBN
Keith Schaafsma, MBA, CFP