Late-in-Life Marriage: Pros, Cons, and More

Recently I was thrilled to hear that a dear friend is in a new committed relationship. Widowed and in her early sixties, she spent the last several years focused on her children and grandchildren. Then she met that special person and is now contemplating marriage.  

Her hesitation? How to combine their finances. Both she and her partner have grown children and assets of their own. They are looking forward to building a life together, yet both also want to protect their families and lifestyles.

When two people tie their lives together legally and financially, there aren't any right and wrong financial formulas. Yet at her stage in life, it's important to look at the big picture. Here's how I suggested she approach it.

This is a fair question for any couple—but especially valid once a couple is past their child-rearing years. For many people, the answer is a clear yes—for commitment reasons, if nothing else. Of course, others may not agree. Every couple has to decide if marriage is right for them, based on their own circumstances, values, and emotions. There are financial pros and cons to consider. Here are just a few examples.

• Marriage could allow you to share the burden of monthly expenses and increase your buying power.
• Marriage could allow you to get lower premiums or greater discounts on insurance for additional coverage for your spouse (think group health insurance, home, and auto insurance).
• Marriage makes you eligible for spousal and survivor Social Security benefits.
• Marriage can allow you to use your spouse's unused estate tax exemption, which can help lower your federal estate tax liability if they precede you in death.

• Marriage could expose you to each other's creditors, insurance risks (health care, home, and auto), higher income tax rates, and long-term care costs.
• Marriage could make you financially responsible for your spouse's dependent children.
• Marriage can potentially make you ineligible for widow's benefits from your previous marriage.
• Your loved ones' expectations of an inheritance could cause an issue with family dynamics with a marriage later in life.

Also, be aware: Marriage can create a legal status that could override some of the estate planning that you completed when you were single. So, be sure to consult your estate attorney and/or financial advisor before you get married to understand how a marriage could affect your existing estate and/or financial plan.

Indeed, these are sensitive and emotional questions for any couple, and they can be especially complicated for those who come together later in life with children and significant assets. But they're worth careful consideration. If you plan ahead and identify areas for potential individual and family strife, it could help give you and your children peace of mind as you walk down the aisle. I truly believe that working together to address these issues is essential for building a strong foundation for a long-lasting, supportive relationship.

If you do decide to get married, congratulations! Next, it's time to plan out your financial lives—as a team.

To sort things out, I separate financial issues into three major buckets: what to do with your money during your life, how to prepare and pay for a serious illness or incapacity, and finally, how to pass on your assets upon death.

In essence, you have to decide what you want to share and what you want to keep separate.  
Although a prenuptial agreement isn't a requirement, it can be an extremely valuable tool—especially if one person is coming to the marriage with more financial assets or property, if one or both of you owns a business, or if one of you has significant debt, alimony responsibilities, or special needs children.  

You need to decide together what feels right for you. As an example, my friends—we'll call them Elaine and Stephan to protect their privacy—were in their fifties when they decided to get married. Although both owned their homes, had good jobs, and had saved for retirement, Stephan had a much higher net worth and a larger income. Elaine was going to move into Stephan's house, but they both felt it important that the house feel like their home versus his home. After some open and honest discussion, Elaine decided to sell her home and use the proceeds for a major addition to Stephan's home—establishing her ownership and ensuring that his house psychologically became their shared home.

In addition, they decided on a "yours, mine, and ours" cash flow system by setting up a joint account for their agreed upon contribution for shared expenses, with each maintaining their own accounts for personal, discretionary expenses and family gifts. These arrangements may sound easy, but they may not be. So, expect the process to take time and perhaps compromise.

Most of us tend to have an optimistic view of the future. So, a serious illness or incapacity may be the furthest thing from your mind. But it's important to make decisions about these possibilities when you're healthy—and as a couple.

Nursing and in-home care is expensive, and Medicare doesn't cover it. Consider these questions:

• Would you depend on care from each other, another respective family member, or a third party?
• How would you fund these expenses—jointly, independently, or would it be wise to invest in a long-term care insurance policy?
• Would the responsibility and cost of care cause strife between the respective families, and if so, what action should you take today before any challenges occur?

Next, to put yourself in the best possible position to advocate for each other in case the other can't speak for themselves:

• Discuss your wishes in case of a life-threatening accident or illness.
• Fill out advance health care directives and power of attorney documents, and have named successor trustees for your revocable trust (if you have one).
• Ensure that each family member is aware of your choices and reasoning so that in times of crisis, there is clarity.

Estate planning can be complicated and emotional for anyone. But it can become even more so when you want to provide for each other, your respective children, and perhaps also a charity. For example, "spousal share" is an issue that can complicate matters. That occurs when spouses in certain states have a claim on some assets of the deceased spouse's estate. So, if my friend's future husband leaves all his assets to his children from a prior marriage, depending on the state, my friend could elect her spousal share of her deceased spouse's estate, even though she was not left anything in his will.

Another aspect to consider is that each spouse will need to talk with their beneficiaries about a change in inheritance expectations with a new marriage, so that it isn't a shock upon mom or dad passing away. Unfortunately, this kind of scenario plays out more times than one would imagine and can lead to extensive probate litigation.

My best advice? Be honest with each other and your children. Be thoughtful, and work with experienced, compassionate estate planning professionals. They are trained in the technicalities of wills, trusts, and beneficiary designations. Also, if you employ trusts in your estate plan, make sure that you choose trustees you know you can depend on.

While these discussions can be difficult, failing to address these questions could cause unpleasant surprises or even resentment of each other or your respective families. The good news? Your honesty and authenticity will pay off in the long term. Also, consider that doing nothing is a decision in itself and could be a recipe for chaos. Instead, take control. I firmly believe that every couple has the power to guide their own lives and the ability to provide for the people they love while maintaining a level of blended family harmony.