Love, later in life, could be the best thing that has ever happened to you. The traditional way to celebrate and to prove the significance of such an event has been to marry.
However, you may be surprised to know that (according to the Pew Research Center) cohabitation versus marriage for those 50 and older is sharply on the rise.
Per February 2016 PRC statistics, over the previous nine years there was a 75% increase in older Americans choosing to live together rather than marrying later in life. Why? Largely because marrying later in life can have negative consequences.
It could harm one or both parties monetarily, interfere with getting the best health coverage possible, and/or create problems with children from a prior relationship.
The message here is, before you decide whether to marry or cohabit, you should analyze your personal and financial circumstances. This will help you to determine which living arrangements will contribute to the most comfortable lifestyle, for the present and the future, for each of you.
Since each couple’s situation is unique, and the Social Security regulations as well as tax laws (both federal and state) are very complex, it’s smart to hire an expert in estate planning to guide you.
An experienced estate planner, financial planner or accountant can guide and consult where you stand to gain or lose depending on if you marry or just live together. They will look at the details of each party’s income, amount and type of debt, and family relationships (kids from a prior marriage, for example).
Issues an Estate Planner Would Consider
While your new relationship will, ideally, enrich your lives on many levels, let’s be practical. It is possible that the increase in joint income – the figure used to calculate eligibility for Medicaid, among other things – may disqualify one or both partners from access to needed health care. Marrying later in life can also affect other types of income, such as a survivor’s share in a late or divorced spouse’s pension or other benefits.
The following are some of the issues an estate planner would look at before advising you:
Most divorce decrees state that alimony will stop if the recipient remarries. An estate planner can work out if forfeiting that income may outweigh the value in getting married. For the record, unless the divorce decree states otherwise, cohabitation will not interfere with the former spouse’s alimony.
Depending on the phrasing of the child support terms, remarriage could end this support.
A surviving spouse’s remarriage could make them ineligible to continue receiving their late spouse’s pension. This depends on the applicable provision in the divorce decree, and possibly on the laws of the state in which they live. (If a Qualified Domestic Relations Order (QDRO) was created at the time of the divorce, even in the event of a remarriage, there should be no interruption.)
Social Security Income benefits:
SSI includes monthly retirement, survivor and disability benefits. Remarrying could eliminate all of these, depending on the recipient’s age and whether or not they have a disability.
As stated above, preserving one’s estate for one’s children can be a major concern. Remarriage or cohabitation may not only complicate the eventual settling of the estate for the children but for the widow(er) as well. Having a prenuptial or cohabitation agreement in place should alleviate these concerns. Just make sure the agreement is updated as needed to keep it current.
As mentioned earlier, Medicaid eligibility is determined, in large part, by one’s income. If married, then both spouse’s incomes are included in the calculation. If marriage increases your income level sufficiently, you could lose access to that program.
The question then is whether you can fully rely on your new spouse to supply medical coverage until Medicare kicks in. Also, if long-term nursing home care is required, Medicaid may be the only way to pay if you don't have sufficient funds or long term care insurance; Medicare does not cover long term care.
Financial aid for children:
Do you or your partner still have kids in college who rely on financial aid? An increase in your income may disqualify them.
How to Protect Yourself When Marrying Later in Life
Once you have assessed your respective financial situations, it’s time to draw up detailed agreements. These should state who owns what, and how you wish your property to be disposed of, when the time comes. (This will likely mean that each of you will hire your own attorney to represent your individual best interests and reduce the possibility of a misunderstanding.) Prenuptial agreements in the US, while recognized, are not always strictly enforceable.
This explains why there are supplemental documents, like the Qualified Domestic Relations Order, as well as trusts that are designed to reinforce protection of one’s wishes. Courts also tend to take cohabitation agreements seriously, which you can further strengthen with additional documentation.
Let’s say you’re resuming a relationship with a former spouse. The kids’ inheritance may not be at issue, but there are still the various financial matters to consider. These can indicate what relationship would best suit you as a couple.
Additionally, in the prior divorce, you divided your assets up. Now that they’re re-merging, what is communal and what is separate? Including your children in the agreement-creation process may make things simpler down the road. Having more witnesses to the agreement will make it more difficult for anyone involved to raise objections later.
On a final note, if you do decide to cohabit, you can still solemnize the event. Commitment ceremonies, tailored to suit your religious or spiritual leanings, are a positive way to swear your allegiance to one another in front of friends and family, without the same consequences as marrying later in life.