Love can come at any age. While it is wonderful to find someone worthy of sharing your life, especially in terms of remarriage later in life, there can be some financial complications. People are often set in their finances during retirement, and remarriage can affect everything from inheritance to taxes. So, what’s a couple to do?
Prior to remarriage, financial planning is key. Sit down with your future spouse and a qualified, certified public accountant, financial planner, and/or legal advisor to discuss your finances and get decisions and paperwork in order. It is well worth the investment of your time, as it provides clarity and peace of mind regarding your money. Note that the act of marriage can change legal and financial obligations; thus, there is much to know before tying the knot. Here are three principles to consider:
- One’s relationship with money has an emotional component. Have an honest conversation regarding finances with your future partner to discuss saving and spending habits, disclose assets and debts, review credit reports, and discuss combining property and finances versus keeping things separate. Understand how joint accounts will work and make clear which accounts or assets you wish to keep separate. Clarifying financial responsibilities sets up clear expectations and can contribute to a successful relationship.
- Marriage can change your economic and legal status. With the help of qualified professionals, prior to remarriage, couples should ascertain how federal and state laws can affect one’s financial accountability as it relates to changes in marital status. For example, Will you be in a higher income bracket? Or will you be liable for your partner’s debt? These are important questions. Be prepared to discuss things like filing of taxes and estate planning, inheritance and beneficiary information, and the implications of marriage related to assets, debt, medical benefits, social security, pensions, other aid, and more. Understanding obligations and knowing how to plan helps you set realistic financial goals together.
- Lifelong savings deserve protection. Consider a prenuptial agreement, a written contract that enables couples entering marriage or a civil union to safeguard property and savings and define marital rights in the event of death or divorce. Often, people relate prenups with a lack of trust; however, truth be told, they are helpful tools that protect money and assets and assign roles and responsibilities to each spouse. Setting up a plan provides comfort in your new relationship and can protect the inheritance rights of children from previous marriages.
Understanding how remarriage can affect your finances, taxes, and legal responsibilities enables you to make wise choices and helps you avoid challenges down the road. Since finances are often at the crux of relationship issues, you and your significant other are bound to increase your marital bliss by creating a financial plan for your future that clarifies where each of you stands when it comes to your money.