Americans are living longer, working longer and staying active long into retirement. It’s not surprising, therefore, that their busy lifestyles often include new romantic relationships.
In fact, remarriage is on the rise for adults 55 and older, according to Pew Research. In 2013, 67 percent of previously married adults ages 55 to 64 had remarried, up from 55 percent in 1960. And fully half of adults ages 65 and older had remarried, up from just 34 percent in 1960.
If you’ve found that special someone, getting married after 50 can be a thrilling, fulfilling experience. But tying the knot at a later age does carry potential financial consequences that most couples in their twenties and thirties don’t have to consider. For instance, you may have children from previous marriages whom you want to inherit your assets or you may receive death benefits from a late spouse.
Although it’s difficult to consider a negative outcome when you’re giddily entering a marriage, divorce statistics remain high, and families often bicker and litigate over the assets of deceased parents or stepparents. To avoid these potential difficulties, couples considering marriage after 50 should take time to have a serious conversation about their financial plans.
It may feel uncomfortable to have a conversation about money with your spouse-to-be, but if the new marriage doesn’t work out, avoiding those conversations ahead of time could end up leaving your retirement funds or health benefits in jeopardy, warns Jimmy Lee, CFS, CEO of the Wealth Consulting Group in Las Vegas.
“At that point, you may no longer have the capacity to go back to work and earn a living,” Lee says. “If you have these discussions up front, it makes for a healthier relationship and can take away a lot of anxiety about the real reasons someone is interested in marrying you.”
Three Conversations to Have Before Getting Married After 50
Before you commit to marriage, make sure you cover these three financial scenarios.
1. Planning for Estates and Inheritances
You may have planned to leave your estate to your children from previous marriage(s). However, when you marry again, your new spouse could legally lay claim to that estate unless you take steps to prevent that.
Lee recommends that mature couples open independent property trusts before the day of the wedding to separate the property that each person acquired before the marriage. When you set up a separate trust, the assets you brought into the marriage will belong only to you and your heirs in the event of divorce or death.
Without a separate trust, all assets belonging to either spouse may be considered community property—belonging equally to both spouses.
“Take time to think about how you want to leave your assets to your spouse or children,” Lee suggests. “If you’re getting married later in life and want to disinherit children from previous marriages, it’s important to know that litigation could occur, so you can take steps now to avoid that.”
Because property laws vary from state to state, consult an expert in your state of residence to help you make the right moves.
2. Designating Beneficiaries for Death Benefits
If you currently receive death benefits from your late spouse’s pension or another fund, think about whether you want to leave those benefits to your children, new spouse or another beneficiary. Although death benefits or life insurance can be left to anyone you designate, there are a couple legal avenues to consider.
If, for instance, those benefits are simply paid to an individual, they will be subject to estate taxes upon your death. If the beneficiary you designate has outstanding debts, their creditors may have access to them. But if you set up an irrevocable trust as the beneficiary of death benefits or life insurance, the funds can be paid out to your beneficiary without being subject to estate taxes or creditors.
“People very often forget to change beneficiary designations,” Lee says. “So it’s very important to take time to consider whom you want to receive those benefits and make sure it’s all properly handled.”
3. Filing Taxes as a Married Couple
Many people are still working in their fifties, sixties, and seventies. If you and your soon-to-be-spouse are among that group, you should discuss how filing as a married couple will impact your tax rate.
Lee recommends sitting down with a tax professional and modeling the potential scenarios, such as married filing jointly and married filing separately. By modeling each scenario, you can determine which approach will help you comply with the tax laws but still optimize your income.
“Just because you get married doesn’t mean you suddenly have to start filing taxes jointly,” Lee says. “Especially if you own a business or if you each separately own businesses, it could be beneficial to file separately. A tax professional can help you figure out your best steps.”
Getting married can signal a wonderful new beginning in your life, but it’s a step that should be taken deliberately, with careful consideration given to your future and your finances. “Marriage should be about love, always, but it is smart to do some financial planning upfront, especially for second or third marriages,” Lee advises.
So before you tie the knot, consider your financial situation and your financial goals—and make sure they align with those of your special someone. Once you’ve broached those important discussions, you can confidently head off into the sunset together.
Disclaimer: This article is meant for informational purposes only and does not constitute legal or tax advice.
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