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Exchanging Vows After Retirement
Financial considerations around marriage in your retirement years
By Michael Falcon of Merrill Lynch
Baby boomers who get married for the
first time, or for an additional time, later in life
can face numerous financial issues that are different
from those of young newlyweds.
Boomers may have to provide for children
from a previous marriage, blend retirement
benefits, choose which house to live in, or
change estate-planning directives.
To ensure these issues are properly
addressed in advance of their marriage, retirees
and boomers should have a conversation with
a Financial Advisor, in addition to speaking
with their attorney and tax advisor. During the
conversation, discuss assets, liabilities, budgets
and sources of income. If one person is bringing
substantially more assets or liabilities to
the marriage, for example, an attorney might
recommend a prenuptial agreement to detail
how assets will be divided in the event of
divorce. Keep in mind that you may become
legally responsible for your spouse’s debts
once married.
A Financial Advisor can help you work
through the financial issues and prepare for
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discussions with attorneys and accountants
about the important decisions which should be
made before vows are exchanged. After your
estate plan is drawn up by your legal and tax
advisors, your Financial Advisor can work
with you to implement the plan.
A Few Key Decisions
Deciding the disposition of a family home
is important, as it is often a couple’s largest
investment. Remarrying boomers and retirees
may face some tough decisions about deciding
where to live, whether to re-title the house and
deciding what happens to the property if either
partner dies.
A typical scenario might involve a home
that you own and share with your new spouse.
You may want your spouse to continue living
in the house if something were to happen to
you, but still desire to ultimately leave the
property to your children. Titling the property
in such a way that the surviving spouse inherits
the house free and clear is referred to as
joint tenancy with right of survivorship and
ensures that your spouse can continue to live
in the house, but means it will ultimately pass
based on his/her will, not necessarily to your
heirs.
Another possible strategy would be to title
the property as tenants in common. Ownership
as tenants in common allows each spouse to
leave his or her interest in the property to his
or her heirs. A potential pitfall of this strategy
is that neither the surviving spouse nor the
deceased spouse’s heirs own the property
exclusively. Disputes can easily arise and the
property may ultimately need to be sold to
resolve.
A better approach may be to place the
house in trust or structure your plan such that
your spouse inherits the house outright and
you meet your bequest objectives for other
heirs with other assets.
Titling Your Assets
Becoming engaged is a good time to take
a fresh look at how your other assets are titled,
as well, particularly if you own an asset jointly,
or have retirement accounts or insurance
and annuity contracts where the beneficiary
designation takes precedence over your will.
Ensuring that your assets pass to your intended
beneficiaries, requires the coordination of how
your assets are titled, your beneficiary designa-