Marriage necessarily involves both small and large economic compromises. Joint or individual checking accounts? How much do you spend on a car? Name brand or store branded grocery?
When several people remarry later in their lives, their interests increase. How should the costs of those bucket list retirement trips be split? Whose name will be in the new condo? Who inherits a home or stock portfolio: What children are from the previous marriage of a surviving spouse or that person's children?
Many newlyweds have discovered that the answers to these questions evolve. For the nonprofit's retired directors and retired IT professionals in upstate New York, it meant revisiting their expectations of who would pay for what.
“We talked about what we both bring financially to marriage,” said Elaina Clapper, retired director of an agency supporting victims of domestic violence. Clapper, 76, said he divorced for about 40 years before marrying David Clapper in 2018.
“For a while, David paid me a certain amount each month,” Clapper said in response to household expenses. But soon, a couple living in Watertown, New York decided it would be easier for each partner to take charge of certain monthly expenses.
“There are certain bills that she pays, there are certain bills that I pay,” Clapper said.
As the scope of life increases and the stigma around divorce declines, Americans over 65 remarriage at an increasing frequency, according to a study in the National Center for Family and Marriage Marriage Research at Bowling Green State University, as the scope of life increases and the stigma around divorce declines, the trend is throttling by increasing frequency of Americans over 65 remarriage. The proportion of people in that age group remarried after death or divorce between 1990 and 2022, rising from 4.6 per 1,000 to 5.1. This is a marked contrast to the entire population, where the proportion of remarriages has plummeted by about half.
This is a tendency to force couples to consider potentially complex scenarios of how or consolidate their finances.
“Later in life, more complex merges tend to do that depending on the complexity of your previous life,” says Janchatsky, founder of Harmony, a multimedia platform for women's financial empowerment.
Do you separate it or together?
Older couples are likely to have retirement accounts, real estate, and other assets, which can be difficult and even more difficult to mix up in the future. One or both partners may have children from a previous relationship, complicating the question of who inherits what.
According to one expert, the simplest strategy to prevent unintended entanglement is surprisingly difficult to practice. Lee Meadowcroft of Skinner Act in Portland, Oregon, said he advised his client in this situation to separate things like bank accounts, especially if he wants to store assets for his heirs, particularly for an adult child.
“It seems like it would be great to keep everything very separate, but it's a rare couple who can actually do it for a long time,” he said. “There are ways to protect your finances and keep things very clear, but in reality, those things usually fall apart.”
Scott Rick, an associate professor of marketing at the University of Michigan, studies how romantic partners navigate these differences, and Scott Rick says that minor contradictions in money management are fairly common among those who remarried in their later years. “I think you need to understand more about their spending habits that may seem strange to you. They may have hobbies and quirks that they may have developed over the decades before meeting you,” Dr. Rick said.
“We're committed to working with people who are looking for a way to help us,” said Sean Williams, a partner at Paragon Capital Management in Denver. “You have to have a long leash to understand that they've been doing this for over 40 years. You're not going to change them,” he said.
For many couples, a less-formed approach works, but can have potentially serious consequences for widows, retirement experts warn.
Cindy Haunsel, chairman of the Women's Institute for Safe Retirement at the Nonprofit Women's Institute, said women often come to a second marriage with less accumulated wealth than male partners. This is especially true for older women whose generation is limited in terms of career progression and income opportunities, she said.
Hounsell said the scenarios she frequently encountered could be financially dangerous for those who contributed to housing costs after remarriage, but whose stepchildren have not filed legal claims on the inherited home. For example, some spouses contributed to the purchase, but their names may not belong to the act.
“I often hear about workshops: “My mother put up a portion of the down payment, but I can't afford to live there,” she said. “The situation is that the mother has no place to live.” And if the heir sells the house, the spouse has not made a legal claim for the proceeds.
Prenups, Trusts, and Trust
The outcomes that Hounsell warns are one of the reasons the strengths of real estate planning are a huge supporter of tools such as prenuptial agreements, life insurance and trusts. “It's important to have a pre-up because who gets what to force a conversation about what happens if this marriage ends in death,” said Ginger Skinner, founder of the Real Estate Law Practice in Portland, Oregon and a colleague of Meadowcroft.
While the discussion about prenuptial agreements is perhaps offensive, it could lead to mild assumptions and implicit differences between spouses, Skinner said. For example, if both partners have children from a previous relationship, they may have different ideas as to who is eligible after each dies. “Parents can split their loyalty between their new spouse and their children,” she said.
Life insurance is one of the means by which people use to allocate assets intended to be inherited by their spouse or children from previous relationships, and significant wealth disparities can encourage them to contribute proportionally to household costs based on the means rather than splitting costs into centralized ones.
The calculation can be complicated. Williams of Paragon Capital Management said she has one client who is much wealthier than her second husband. Williams said that he will receive revenue from sales based on his financial contribution to maintenance and maintenance over the years.
For people with important assets, trusts can protect their financial heritage if there are large medical expenses that Medicare does not cover, such as when their new spouse lives in nursing homes or memory care facilities.
Clapper said that this was corrected shortly after the marriage. She said she wanted to make sure that if she dies first, his contribution to their joint household costs will be recognized. “Everything goes quite a bit to my son and grandchildren, but there is also a clause that offers something to David,” she said.
Clapper said he was grateful, although he did not expect to be included as a beneficiary in his wife's will. “I was grateful that she wanted to put me in the mix,” he said.
Planners say that these types of legal structures may look like a transaction even if cold, but if the deceased heir has to leave the house when he sells it, they will create a financial cushion that can protect the surviving spouse. Still, the advantage of real estate and retirement planning is that friction can arise when real estate is involved.
“Housing is difficult. Conceptually, they are easy,” said Michael Fiffik, managing partner at Fiffik Law Group in Pittsburgh. However, the emotional attachment that people feel towards their homes, especially those of their long-standing family homes, can make real estate planning difficult.
Meadowcroft said disputes could arise if a homeowner grants the legal right to live in a home that his spouse owned until after his spouse's death. “When the house is involved and the new spouse lives in the house, the kids are just waiting for the other person to die.”
Should you remarry?
Some older couples who have performed the numbers may find that the best financial decisions are not married at all, Meadowcroft said. “It can get really messy and cause so many problems,” he said.
For example, marriage causes inheritance rules for certain retirement assets. If one spouse has such an account, Fiffik said that other spouses must be designated as beneficiaries. And if a person with any of these accounts wants to bequeath the assets to someone else, such as a child, for example, he or she will have to legally hand over their rights to their new spouse. “Retirement accounts always require special care,” he said.
For some widows and widows, remarriage may mean confiscating certain pensions or social security benefits. “If someone is getting a pension, they may not want to remarry because that could go away,” Williams said.
Meadowcroft recalled choosing to remarry one client couple in their 80s. They decided to hold a religious ritual, but continued to separate their respective estates by not obtaining a marriage license.
“They said in God's eyes they were married,” Meadowcroft said. “The purpose of the state of marriage has nothing to do with it. Who got yours when you died?”
