By Lyn Dippel
If you’re middle-aged and thinking of marrying – or remarrying – you are not alone. 
Midlife divorce is on the rise and at least 40 percent of those women will remarry. Conversely, others have put their careers ahead of tying the knot, making midlife marriage more common than ever.
Getting married later in life raises financial and legal issues that can be more complicated than for younger couples. It’s important for women to enter a union understanding what will change for them financially – positively and negatively.
Most women hesitate to ask a future spouse probing financial questions, even if they’re willing to share information about their own finances. As marriage is nearly always a union of both personal and financial lives, full disclosure is key to a smooth transition.
Below are a few areas where marriage can be good or bad for your finances.
Receipt of benefits:
The new spouse may now be eligible for survivor benefits on the other spouse’s retirement pension and/or Social Security.
Marriage can eliminate qualification for benefits based on the benefits of a former or deceased spouse, such as Social Security or survivor pension benefits.
Marriage will also end alimony payments, which could have a big impact on one spouse’s income.
The ability to qualify for financial aid for college may also be affected so timing of the marriage may be important.
Taxes:
Filing a joint tax return will likely change the overall tax rate for each. A tax advisor can help determine the best filing method.
Allowable retirement plan contribution amounts may change depending on the household income and filing status.
Health care / insurance:
A spouse may be eligible for coverage by the other’s insurance plan.
Spouses in most states are responsible for each other’s medical and long-term care bills.
Estate planning:
Even if a wife’s will leaves everything to her children from a previous marriage, in Maryland, surviving spouses are automatically entitled to one-third of the deceased spouse’s estate. Therefore, you may need a prenuptial agreement or a Q-Tip trust to ensure that children receive their intended inheritance.
Understanding your affianced’s financial history, his or her comfort with financial risk, income, debt and spending patterns will help avoid trouble down the road. Equally important is having a plan for paying expenses. Many couples find it works best to contribute proportionately according to income. In all cases, major financial decisions should be made together.
For credit purposes as well as emotional independence, each spouse should maintain his or her own bank accounts and credit cards. Joint accounts are great for bill paying, savings and other conveniences. Investments can be managed separately if there are differing levels of risk tolerance.
There is no one-size-fits-all solution, but taking time to discuss your perspectives and understand your differences is critical. Talking it through with an objective third party, such as a counselor, financial advisor or other trusted advisor can also help.
Lyn Dippel, JD, CFP®, President of FAI Wealth Management, provides financial planning and investment management for transitions such as retirement, career changes, sale of a business, relocation and inheritance. * http://investfai.com
