At any age, marriage has an impact on every aspect of life and involves the joining of finances. When a mature couple in their 40s, 50s or older gets married or remarries, there are some unique challenges to be addressed as both partners bring more “baggage” from their significant personal and economic histories into the marriage than those who marry as young adults; this makes the journey to the altar all the more complex.
The history usually includes divorce or widowhood, and will involve important decisions concerning children, finances, housing, retirement, health and more.
Planning ahead for the financial and legal consequences of a late marriage can be complicated, but will help to ease the transition. To have the best chance of overcoming some of the potential pitfalls, open communication and the sharing of histories, financial goals and circumstances are important. Individuals should be candid about their financial obligations and address potential expenses such as health care early, particularly if there are already some signs of latent health issues.
Many people don’t find out until after the honeymoon that their money personalities and styles differ. Older couples are often more established and set in their ways and have had time to accumulate significant assets. This brings to the fore some issues particularly where one partner has significantly more assets than the other, or if one partner is a spendthrift, whilst the other is very frugal, saving every receipt to the irritation of the other.
Don’t be put off by all the important financial and legal decisions you will need to make, but do get sound professional advice before the wedding. Here are some of the financial issues you should consider as early as possible to ensure that your best financial interests, both as individuals and as a couple, are protected in the exciting new union.
Do you know how much each of you is worth? List pre-existing assets and debts. Include assets such as income from salary, investments, rental income, bank account balances, retirement benefits, cars, property and other significant assets. Liabilities may include ongoing expenses such as school fees, insurance premiums, rent or mortgage payments, outstanding loans and medical bills.
Will part or all of your finances be merged? Will you have joint or separate accounts or combination of both? Some couples opt to keep most assets and property separate to minimise complications, especially when there are existing heirs and other beneficiaries involved.
Don’t become overwhelmed by the enormous amount of paper work that you need to go through. Legal documents such as life insurance policies, retirement accounts and wills will need to be adjusted to reflect your new circumstance and to ensure that each individual’s estate plan reflects their wishes.
If not addressed properly, the issue of who controls the bank accounts can be a source of conflict, particularly for those who have enjoyed complete independence prior to the union. Determine one another’s indebtedness so that there are no rude shocks.
Estate planning involves organising your property to ensure that your family’s financial needs are met after your lifetime. When children are involved or a former spouse is deceased, it helps to ensure that intended beneficiaries will indeed receive the transferred property.
Once married, a spouse automatically becomes a beneficiary of a deceased partner’s estate unless practical steps are taken to prevent this. A late-in-life marriage can cause much discomfort for families that have high hopes of an inheritance or simply expectations about how money will be or should be handled by a surviving parent. How do you want your estate to be distributed? How much of your pre-marriage assets should go to children from your previous marriage?
You will need to amend your wills, powers of attorney, life insurance policies, retirement accounts, investment funds and any other accounts where beneficiaries or people who have some control over your finances are named.
A trust is a useful tool that offers protection for first families as well as new spouses. Whether a trust is affected or not will depend on who the beneficiaries are and how the trust was set up in the first place. Legal advice must be sought to ensure that a trust does indeed meet its objectives to protect those that it is intended for.
Financial experts sometimes recommend prenuptial agreements, particularly when financial circumstances are already established. A prenuptial agreement is “a written contract that outlines the terms and conditions associated with dividing up financial assets and responsibilities if the marriage dissolves.” It basically outlines who gets what if you divorce or one of you dies. The agreement should be discussed prior to the marriage and with a lawyer so that issues concerning assets that are being brought into the marriage are fully addressed.
Even though one doesn’t wish to start a marriage with negative thoughts about its survival or otherwise, having a pre-nup can help determine what will be left separate for respective families to inherit or can prevent a spouse from challenging a will or existing trusts in the event of a divorce or your demise.
As with all other aspects of a relationship, honesty and communication are the keys to financial harmony. These are just preliminary conversations; it will be important to maintain communication lines regarding finances open throughout your married life.
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