It is always great to hear that clients, friends and family have found a special partner to share their lives with, whether they are 30 year old business owners or 60 year old millionaires. When people marry later in life, however, there are financial implications that should be thought through. Here are just a few areas to consider:
Prior commitments: If your new partner is divorced, he or she may have financial obligations. In the case of divorce, for example, your new partner may have been ordered to pay half of his or her retirement fund to the former spouse. If your partner has adult children, how will your marriage impact them financially? Will you need to update your will to reflect the change? Also, if you have college age children, will you pay the tuition jointly or alone?
Prenup: Whether one or both partners are financially well off, it is worth considering a prenuptial agreement should things not work out. This can be a sensitive subject, because who wants to think negatively about the relationship when you're about to start a life together? But it is a subject you can't ignore. If either of you has substantial assets, consult an attorney to decide how assets would be divided should the marriage end within a specified time period. An attorney can also tell you what laws in your state, such as community property laws, could have an impact.
Assets: In addition to traditional assets like homes and cars, talk to your financial advisor about other assets like insurance policies and how they will be affected by a new marriage. For example, if you have a life insurance policy that is part of your estate plan, will you add your new spouse as a beneficiary or remove any of the previously named beneficiaries? Does your will need to be updated? Do you need to make updates to the beneficiaries on your retirement assets?
Day-to-day finances: This can be tricky when two adults who have handled their own finances combine into one household. Discuss what financial responsibilities and bills each will take on, or if you combine your income and expenses at all. Each partner may have different expectations, so discuss this up front to avoid unpleasantness later on.
We recommend that you get your professional advisors involved to help you through this process. By working with an objective third party, you can remove some of the emotion from the situation and focus on practical matters. Once you've hammered out the details, you can focus on your marriage and your life together.
Getting married later in life? Consider the financial implications of a late-in-life union and discuss them with your financial planning team. Have questions? Want more info? Contact Joseph M. Maas of Synergetic Finance in Seattle or visit him online at Synergetic Finance or Synergetic Finance Blog