More planning needed before older couples marry

Your Money

June 17, 2007|By Janet Kidd Stewart | Janet Kidd Stewart,Chicago Tribune

June is wedding season, a time when couples often hear advice about starting their financial lives together.

Spending habits, savings goals, debt management and estate planning are all topics that financial planners urge couples to discuss before venturing down the aisle.

While young couples might have decades for trial and error, the stakes are higher for those in or near retirement who are planning to marry.

"It's going to take a little more planning than perhaps you did the first time around," said Rande Spiegelman, vice president of financial planning for the Schwab Center for Investment Research in San Francisco. "Fortunately, later in life people tend to be a little less starry-eyed anyway, and this conversation can come a little easier."

Although starting the conversation can be easier, older couples typically have far more assets - and complications - to deal with, experts said.

Those with adult children will have to balance taking care of each other with their desire to leave an inheritance. New Medicaid qualification rules for nursing home care make it more difficult to preserve wealth for heirs. And a new marriage makes the decision about when to take Social Security benefits even more complex.

All told, the hassles involved with getting married later in life in many cases aren't worth the trouble unless you have personal convictions about marriage that outweigh the financial, said Sheryl Garrett, a financial planner and author of Money Without Matrimony: The Unmarried Couple's Guide to Financial Security.

"Younger people are typically better off financially getting married," she said. "But the older you get, the less it makes sense," she said.

Older couples planning to walk down the aisle should talk about these issues:

Should our money marry?

Decide immediately whether you'll combine finances or keep them separate.

Particularly in community property states, in which marital property is considered jointly owned, once you commingle funds it can be very difficult to separate them.

Spiegelman suggested sitting down before the wedding and having the "yours, mine and ours" talk. Form a combined net worth statement listing assets and debts, to whom they belong, and then list any you expect to hold jointly.

The Schwab planner recently wrote an online article with more tips on the financial side of marriage.

Garrett recommended that older couples keep most of their money separate, with a joint checking account for daily living expenses.

Consider Medicaid changes.

Last year's federal budget legislation made it more difficult for elderly people to transfer assets and then apply for Medicaid for nursing home care. Among other things, it extended the "look-back" period for asset transfers to five years from three (so that assets transferred within that period are penalized).

Setting up a trust or a real-estate transfer - where a healthy spouse can stay in the couple's home until death and the property then moves to heirs - can be worth investigating, said John Roberts, an elder law attorney in Longmeadow, Mass.

Navigating Social Security.

If you're divorced or a widow or widower, be sure to check how the second marriage will affect your Social Security benefits.

Generally, according to the Social Security Administration, you give up benefits based on your first spouse's work record if you remarry before age 60.

Estate planning.

Estate issues are often the thorniest for later-life marriages, experts say, because they involve not only the spouses but often children from previous unions.

"Children may be worried about mom losing her money or being swindled by someone, while to mom it can look like they are only interested in protecting their inheritance," Garrett said.

One tip she shares for older couples is to start fresh with a new residence rather than selling one place and living in the other.

Have a retirement question? Write to yourmoneytribune.com, or via mail at Your Money, Chicago Tribune, 435 N. Michigan Ave., Room 400, Chicago, IL 60611.

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