No matter when you get married or who you marry, it is important to have financial discussions and open the lines of communication about priorities. If you are getting married later in life, there are some specific considerations you should review according to an article from Investopedia, “5 (Financial) Things to Consider Before Later-in-Life Marriage”. It is important to remember that when you combine lives later in life there are a number of special considerations: financial, family, asset, housing, and retirement-related. Here are Investopedia’s five checklist items for you and your future spouse to conquer:
A prenup the first time you get married may seem overly protective unless there’s a big economic difference between the couple. However, after a lifetime of work, building a business or a retirement portfolio, you want to be sure that a second marriage doesn’t create a financial calamity if it fails. A prenuptial agreement lets you go about enjoying your second marriage, says this recent article, “All About Prenups For Second Marriages,” from Forbes.
Here are some of the issue to consider in new marriages:
-Supporting the new spouse through retirement;
-Paying expenses and accumulation of marital property, if the spouses have retired;
-Leaving assets to children, if the new marriage is ongoing at the time of death;
-Balancing the needs of the new spouse with helping their own children;
-Making accurate financial results, if the marriage fails; and
-Ensuring a peaceful divorce process, if the marriage fails.
A new marriage feels like a fresh start and a chance to move forward in life. However, before your wedding celebration, consider these steps recommended in Nasdaq’s recent article, “Getting Remarried? 5 Financial Steps to Take Before Tying the Knot (Again).”
Create a consolidated net worth statement. One fundamental mistake many couples make is failing to look at their combined net worth, until they start talking about how they will pay for their wedding or another big-ticket item. Those who remarry frequently have more complex financial responsibilities; they have to consider child support, liquid and illiquid investment assets, and different estate planning and tax-planning strategies. The best course is to be upfront from the start to avoid damaging your relationship in the long run. Take time to review your individual financial situations, including liabilities, before you create a consolidated statement of net worth.
We Americans like to be married. Evidenced by the fact that about a third of us have tied the knot at least twice, according to the U.S. Census Bureau. While the tendency for younger adults is to delay getting married or not to marry at all, the rising trend for Americans age 55 and up is to get married again.
The Flagstaff (AZ) Business News recently published an article, “Financial Issues to Consider in Remarriages,”which suggests that you should be candid about your financial situation. Couples who are marrying for the second (or third) time frequently have financial baggage. You should eliminate issues later in the marriage and your financial plan by having open and honest discussions about assets, debts and obligations. Think about the following questions to get the conversation started:
As reported in Trust Advisor’s recent article, “Foreign Spouses Need Strong Trust Planning,” there has been a huge boost of individuals who are not U.S. citizens, but who establish residence here. They’re known as “resident aliens” under U.S. tax law. There are also non-resident, non-U.S. citizens (“non-resident aliens”) who will invest in real and personal property situated in the state. This can include a wide variety of real and personal property, from vacation homes to ownership interests in a holding or operating company.
This uptick in foreign business and personal investment means more attention to the complex federal tax requirements applicable to non-U.S. citizens for income and transfer tax purposes. In addition, there are tax issues that impact non-U.S. citizens in connection with transfers of money or property during their lifetime or at death.
Trusts as a means of avoiding paying estate taxes are not as necessary as they once were. However, they have a number of other functions that have become attractive to concerned parents. When children marry and then divorce, a trust may protect an inheritance from a divorce settlement. A recent Kiplinger’s article, “A Trust Can Protect Your Adult Child’s Assets from a Failed Marriage, takes a look at how this works.
It’s not uncommon for a child to get an inheritance and combine it with assets he or she owns jointly with their spouse, like a bank account, car or house. Depending on the state in which they reside, the inheritance may become marital property subject to division in the event of a divorce. If the child’s inheritance stays in a trust account, the inherited wealth may be shielded from a divorce.
Estate planning for blended families can become complicated, but neglecting to plan in advance can lead to unhappy outcomes for the entire family. The Fairfield Bay News in “Estate Planning Tips for Blended Families”advises speaking with a qualified estate planning attorney, preferably one who has worked with blended families and understands the challenges that can arise.
Here are a few general ideas to help you think about planning for your blended family:
Update Beneficiary Designations. Get all of your beneficiaries set and updated, such as those on your retirement accounts and insurance policies. This will ensure they reflect your blended family as well as your estate plan. It’s important to remember that these designations take priority over any instructions in your estate plan, such as in your will or a trust—it’s a totally separate deal.
On Wall Street published an article on the impact of remarriage on estate plans in “Estate planning mishaps: How even the family bible is at stake.”There are some often unforeseen ramifications of remarriage. Questions come up like, “Who gets the personal belongings of a deceased parent?” or “How do you prove title to personal property?“
There’s no title to a family heirloom such as grandpa’s pipe collection. A parent can say that specific items should go to a particular child, but it’s proving that they actually belonged to the parent (rather than a new spouse) that’s difficult. Situations like that prompt this rule of thumb: When a parent dies, first change the locks.
When it comes to estate planning, your marital status isn’t the only important factor: it’s important you’re on the same financial page as a couple. Yes, even when it comes to estate planning! See if this sounds familiar: couples report having open and honest conversations about their finances. At the same time, 40% don’t know what their partner is earning and one in ten were unable to guess it, even when given a pretty wide margin of error. Without this basic information, how likely is it that a couple can do the financial homework necessary to plan for retirement?
Wjbf.com’s article, “9 Questions to consider in planning your financial future,” reports that the Couples Retirement Study by Fidelity Investments revealed that many couples need a far better understanding of their joint financial lives. That said, many elect to divide up the tasks of money management, bills, assets and debts. Although a seemingly equitable idea, it can leave one or both without all the important financial details.
Once the process of legally ending your marriage begins, you will need to make sure that your own interests are protected; that includes updating your estate plan to reflect this big life change. While some things may remain the same (such as leaving your children certain assets), be assured that pretty much everything else will change, according to Forbes’ article, “The First Thing You Must Do When Your Divorce Is Final.”
Once your divorce is final (the divorce decree has been approved by a judge and a judgment rendered), contact your estate planning attorney and begin to review and possibly revise the following legal and estate planning documents: