When two people marry later in life, there are more items to sort through than just wedding gifts. Marriage between two people with longer histories involves important decisions concerning finances, children, assets, housing, retirement, and more. Here are five topics you will want to take up with your intended spouse right away to ensure your best financial interests as individuals and as a couple are protected in your new union.
- Older couples who plan to marry should discuss finances, children, assets, housing, retirement, and more before their wedding.
- When combining finances, it’s best to be open about everything from your degree of indebtedness to investment strategies and retirement plans.
- Be sure to update your tax information, determine your filing status, and update your name and benefit status with the Social Security Administration (SSA).
- Complete estate planning to see that your families’ financial needs are met after you die, and update beneficiary information for wills, life insurance policies, and the like.
- Consider creating a prenuptial agreement to ensure that your financial assets are protected in the event of a divorce and to clarify property division when one of you dies.
1. Combining Finances After Marriage
Older couples have had more time to become accustomed to their own personal habits and money management styles. They’ve also had more time to accumulate significant assets. This can make it a little harder to merge finances, especially when one partner is a spender and the other is more thrifty—or when one partner has considerably more resources than the other.
If either partner has young children from a previous relationship, this will also introduce a set of issues to discuss, such as the payment or receipt of child support and possibly alimony. Even when there are adult children, there are issues of inheritance to clarify.
Some smart planning can help you ease this transition. Here is advice from the Financial Planning Association and the American Institute of Certified Public Accountants that you can use, preferably before walking down the aisle:1 2
- Discuss each other’s credit histories by reviewing credit reports and scores together.
- Determine each partner’s indebtedness and comfort level with debt.
- Reach an agreement about how to share paychecks, savings, and bill payments.
- Set up one joint banking account and an individual account for each partner (or whichever arrangement works best for both of you).
- Determine who will be the primary breadwinner or if you will both be contributing more or less equally.
- Discuss investment strategies and styles, such as whether you are aggressive or conservative.
- Figure out what level of savings you’ll want to have as a couple.
- Discuss what you envision for retirement if you are not yet retired.
- Talk about where you plan to live—now and in the future.
- If children from a previous marriage are in the picture, discuss how you will handle everyday child expenses and school/college tuition.
- Prepare a formal agreement with any ex-spouses about the children.
2. Updating Tax Filing Information
The Internal Revenue Service (IRS) advises newlyweds to ensure that the names on their tax returns match the names registered with the Social Security Administration (SSA). If not, any tax refund could be delayed.3
Also, consider whether it makes more sense financially to file a joint tax return or to file as “married filing separately.” Make sure each of you straightens out any tax issues with a previous spouse before remarrying. If your spouse dies and you remarry before the end of that tax year, you can file a joint return with your new spouse.4
3. Estate Planning with a New Spouse
Estate planning is imperative. This organization of your property is a means to see that your families’ financial needs and goals are met after…
This article was sourced from Investopedia.