Tying the knot again later in life can bring a lot of joy, but can also present challenges — especially when blending assets. Encore marriages and blended families can create unique estate planning needs. To minimize snags and maintain family harmony, consider the following tips to protect your financial interest in your new marriage: *
1: Communicate openly and honestly. Talk candidly about your financial situations and goals. Be sure to cover:
- Financial goals and retirement
- Assets and investments
- Children and guardianship issues
- Taxes and insurance policies
Each spouse brings their own assets, goals and objectives, especially if there are children from previous marriages. Talk about how you plan to provide for each other and your children. You may want to review financial or contractual obligations that may exist with former spouses.
2: Create a Plan. Determine which assets to keep separate and which to combine. Keep in mind the way you title your assets and property impacts how beneficiaries receive them in the future. Plan how you will manage account titles, Social Security benefits and insurance, as well as beneficiary designations on retirement accounts and life insurance policies.
3: Take action. Spell out your wishes and intentions in detail through legal documents to avoid confusion and minimize potential disputes — especially when outlining what assets you plan to leave to your spouse and children. Include items such as wills, trusts, updated beneficiaries and medical powers of attorney in your estate plan. Consider setting up a trust or creating a prenuptial agreement if you or your new spouse plans to leave valuable assets to children from previous marriages.
Marriage Versus Cohabitation
A growing number of older couples are choosing cohabitation over marriage, often for financial reasons. Remarrying might have penalizing effects on retirement income, such as the loss of a pension. If you consider cohabitation instead of marriage, create a written agreement that lists assets and outlines division of property.
Whether you choose to live together or remarry, it is important to consider how your new relationship impacts your finances. Having a plan in place puts your mind at ease and starts you both on the road to financial happiness.
To review your financial plan, contact a Fifth Third Bank financial advisor.