Financial planning for later-life marriages

Couples who marry as young adults usually don't bring a lot of financial baggage to the table. But what if you're getting married in your 40s, 50s or later – after divorce, children and years of building assets have complicated your economic situation? Do you and your spouse-to-be have a game plan for how to comingle your finances?

There are many reasons to seek legal and financial advice before tying the knot. But before you bring in the professionals, there are a few steps you can take to better know where you stand:

First, catalog each person's preexisting assets and debts. Include assets like income from paychecks, Social Security, investment accounts, bank account balances, retirement benefits and equity in homes, cars and other major purchases. Debts might include ongoing expenses such as child support, insurance premiums, rent or mortgage payments, credit card balances, outstanding car loans and medical bills.

Use this information to launch discussions about:

• What are your plans for sharing expenses and living arrangements?
• Whose medical insurance will you opt for – your own employer's plan vs. spousal coverage?
• How long until each of you qualifies for Medicare, and how will you pay for coverage until then?
• How do you want your estates to be distributed? For example, how much of your pre-marriage assets should go to children from previous marriages?

You'll probably want to amend your wills, financial and medical powers of attorney, life insurance policies, retirement accounts, investment funds and any other accounts where beneficiaries or people who control your health or finances are named.

You also might want to draft a prenuptial agreement (prenup) – a written contract that basically outlines who gets what if you divorce or one of you dies. Having a prenup might prevent your spouse from challenging terms of your will or preexisting trusts after you die (it happens).

Other financial considerations:

• By federal law, you can bequeath an IRA to anyone you like, but spouses are entitled to inherit other non-IRA retirement benefits such as 401(k) and pension plans unless they sign away their rights.
• Amounts accumulated in 401(k) plans during a marriage typically are considered marital property, so if you were previously divorced, the court should have divided your accounts through a qualified domestic relations order as part of the divorce settlement.
• Division of pension benefits can be even more complicated, so make sure your attorney reviews prior divorce settlements very carefully when drafting your prenup.
• If you were widowed, or married at least 10 years before divorcing, you can draw Social Security benefits based on your dead or former spouse's earnings if that's more favorable than your own accumulated benefit. However, if you remarry before age 60 (50, if disabled), that option goes away.
• Prenups don't supersede Medicaid rules. The government considers your combined income when determining eligibility to receive Medicaid benefits, including long-term nursing home care.
• Alimony payments from ex-spouses will almost certainly end when you remarry, so factor that into your new budget.
• Widowed spouses of public employees often lose some or all of their survivor benefits upon remarriage, so research survivor annuity or health insurance policies carefully.

Congratulations on finding love later in life. Don't be put off by all the important financial decisions you'll need to make together, but do get sound legal and financial advice.