By: lindsay@formyplan.com August 14, 2018

What You Should Know About Getting Married Later in Life

Financial Concerns with Marriage Later in Life

Some things are simpler when you get married later in life: you don’t need to seek your parents’ approval or fend off eager relatives wanting to know when you’re planning to have kids, for example. But some things are more complicated, especially if you have adult children from an earlier marriage or relationship.

In your sixties and beyond, your personal wealth is hopefully greater than it was in your twenties and thirties. You built that wealth to carry you into a comfortable retirement, and possibly to provide a nest egg for your children and grandchildren after you’re gone. A new marriage can change your financial plans. You still want to help your family, but you also want to provide financially for your new spouse. It is wise to familiarize yourself with property laws that affect you both, and then decide how to proceed.

It’s easy to fall into a scenario like the following: Mike and Carol meet later in life after losing their respective spouses. They fall in love, and decide to marry. Both have children from their previous marriages. Mike built, then sold, a successful architecture firm and amassed significant wealth as a result. Carol, while not quite as well off, also came into the marriage in a comfortable financial situation.

A new marriage can change your financial plans. You still want to help your family, but you also want to provide financially for your new spouse. It is wise to familiarize yourself with property laws that affect you both, and then decide how to proceed.

From an estate planning perspective, Mike’s intentions were to leave his wealth to his children, because Carol had sufficient assets of her own to take care of herself. Unfortunately, Mike dies after a few years of marriage without having executed a will or living trust.

At the time of his death, Mike had a 401(k), as well as a number of assets held solely in his name, including the real estate that Mike and Carol were utilizing as their home. Mike’s intention was Carol to have a right to live in his home for the balance of her lifetime, but ultimately upon Carol’s death to have the remaining value of that property pass solely to his children.

What Mike didn’t realize is that, by operation of federal law, the moment they got married, even though Mike had not updated his 401(k) account beneficiary designation, Carol became the “presumed” primary beneficiary of his 401(k) account. However, the actual named primary beneficiaries on his 401(k) account were his children. As such, under federal law, the surviving spouse Carol would be entitled to 50% of the 401(k) account and the actual named beneficiaries (his children) would be entitled to the other 50%.

Upon Mike’s passing, Carol rolled over her 50% of the 401(k) account into an IRA of her own and named her children as beneficiaries upon her death. Mike’s children will receive nothing from that portion.

As for Mike’s individually owned assets, including his real estate, those assets would have to pass through probate because they were owned solely in his name at the time of his death. When someone dies in Michigan without having signed a last will and testament, they are said to have died “intestate.” Therefore, the state’s intestacy rules dictate who inherits a deceased person’s assets that pass through probate, not the deceased person’s intentions.

If Mike and Carol lived in Michigan, the outcome would not be what Mike hoped for. Carol would get the first $153,000 of the estate, and then would split the remainder with Mike’s children. Mike’s three sons might still inherit a good amount of money, but probably not what they expected, and certainly not what Mike intended. Meanwhile, Carol would take the lion’s share of the wealth Mike accumulated before they even met.

If Carol, brokenhearted at the loss of her husband, dies a year (or even a week) later, her three daughters will inherit not only her assets, but the ones Carol inherited from Mike. Mike’s sons will have no recourse.

This is a bad outcome whether the newly-married couple has significant wealth or a more modest estate. In either scenario, the spouse (if there is no estate plan) would take the first $153,000 of the estate, and half of the remainder. In some cases, this could leave the adult children of the partner who died first with nothing.

Inheritance is not the only financial concern with marriage or remarriage later in life. In some circumstances, marriage can affect the amount of income tax you and your spouse pay on your Social Security checks, rights to inherit retirement accounts, rights under state Medicaid laws (if long term acre becomes necessary), etc. The impact might be significant enough that living together without marriage becomes an attractive option.

Of course, not getting married to a partner can have its downside, too. Without marriage, and without an updated estate plan, your unmarried partner may inherit nothing from you on your death, and would have no authority to make decisions on your behalf if you were ill and unable to communicate for yourself. This is true even if you and your partner had been together for years. The bottom line is that simply marrying, or not marrying, is not enough: you must make and execute a plan that takes into account all of the people you love.

Making Sure You’re Better Off Wed

There are a number of ways to approach the issues discussed above. A common one, though many people balk at it, is creating a prenuptial agreement that specifies how assets will be treated in the event of divorce or one partner’s death.

A prenuptial agreement is a good idea, and not, as some fear, an indicator that you are not really committed to the marriage.

A prenuptial agreement is a good idea, and not, as some fear, an indicator that you are not really committed to the marriage. However, the best way to make sure that your assets go where you intend them to and that all your loved ones are protected is to make a comprehensive estate plan. A prenuptial agreement and an estate plan are not mutually exclusive and it may be wise to execute both, depending on your circumstances.

In documenting your wishes for your assets and who will make decisions for you if you cannot make them for yourself, there are many considerations. Your goal is to provide not only financial security, but peace of mind, for your loved ones. Think about what would happen if you died first, or if your partner died first. What happens if one of you needs to go into a nursing home? Who is listed as beneficiary on your retirement benefits? In whose name is the house you live in? If one of you sold your house to move in with the other, do you want the proceeds of the home you sold to go to your children? Who will have the right to make decisions for you if you can’t make them for yourself? What if your kids and your spouse disagree about the decisions that need to be made?

It’s hard to picture worst-case scenarios when you’re happy and in love, but planning ahead can help you to stay happy and worry-free. If you are considering remarriage in your sixties or beyond, we invite you to contact our law office to make sure the road ahead is a smooth and happy one for you both.