Whether you are widowed or divorced, finding a person to share your life with a second time is something to celebrate. Facing retirement alone can be daunting, but a late-in-life marriage can give you a sense of security and happiness you may not have found alone. When seniors get married a second time, however, they have to be careful to avoid some common pitfalls that can affect their access to long term care and the assets they leave to their children. We often help older couples put plans in place to protect each other and their children, and we are happy to share some tips for mature newlyweds here.
Older Couples Bring More to the Table
The reason late-in-life marriages can cause estate planning and inheritance issues is that older individuals tend to bring more to the marriage than younger couples. Each person might own a house and have adult children from previous marriages. They might each have significant savings and retirement funds, not to mention government benefits. Getting married means that all of these assets will be combined and that each spouse will become the other’s primary heir. This could mean losing certain government benefits, not being able to leave assets to an adult child, and not getting necessary financial assistance to pay for a nursing home if one of you needs it. However, smart planning can avoid some of these obstacles.
Start Planning Before the Wedding!
Our first tip is to get the information you need before you actually tie the knot. For some couples, it may make sense to put off marriage until a certain age or to consider not marrying at all, depending on your tax situation. However, that is simply not an option for some people, and for those people, we highly recommend drafting a pre-nuptial agreement. That may seem like a silly thing to do when you are older and can’t imagine getting divorced, but a prenup is not just useful in case of divorce. It can be written to protect certain assets from a nursing home if one of you needs it, and to protect one spouse from the other’s debts and liabilities. It is not a solution to every possible problem, but it is a good place to start.
Problems Caused by Owning Two Houses
For many people, the bulk of their assets are tied up in their homes. When two people meet and marry in retirement, they often both own homes, but choose one house to live in together. Problems arise, however, in a couple of different situations, including:
- Qualifying for Medicaid. If one half of the couple needs nursing home care but doesn’t have the income or savings to pay for it, they may need to apply for Medicaid. As a need-based program, Medicaid requires that your assets are below a certain limit. Some assets are exempt from Medicaid qualification, including your home. However, the exemption only applies to one home. The house belonging to your spouse could disqualify you, and you would have to sell the house and use the proceeds to pay for the nursing home.
- Leaving the home to your heirs. Each partner may want to leave their home to their adult children. But without proper estate planning, when one spouse dies, the other will inherit the home, regardless of when it was purchased or whose name is on the deed.
The key thing to realize is that there is no “yours and mine” in a marriage, even a late-in-life marriage. All of the assets become joint property unless legal documents are drawn up well in advance of death or incapacitation to protect certain assets for heirs or other reasons.
You’re Never Too Old to See an Estate Planning Attorney
You might each bring what you think is a solid estate plan to your marriage, but the marriage contract will alter the intent of those plans. We encourage you to visit an estate planning attorney to review these plans before saying your “I Do’s.” You need to make sure that each of you, and your heirs, are fully protected and that your wishes will be honored after your incapacitation or death. The Elder Law and Estate Planning team at Ross & Shoalmire would be happy to help you get your marriage off on the right foot! Call us to discuss your options today.