Financial Pros and Cons of Late Life Marriages

Financial Pros and Cons of Late Life MarriagesRecent research on the financial ramifications of living together versus marrying for boomers over the age of 60 has found pros and cons in each of three important areas:

Retirement — Marrying before the age of 60 can have adverse effects on retirement income, especially if you are receiving Social Security benefits from a late spouse’s work record.  If you marry after 60 – or are already receiving benefits on your own record – there is no impact.  If you name a non-spouse as a beneficiary of an IRA, they will have to withdraw and pay tax on the entire amount in the IRA within five years of the death of the original owner, which is not the case for spouses who inherit IRAs.  A non-spouse beneficiary can also elect to take the stretch option, allowing for withdrawals over their life expectancy, but they must take the first distribution by the end of the year following the death of the original IRA owner.

Medical – Marrying after 60 could be hazardous for a poorer partner since spousal assets are counted when determining Medicaid benefits.  Employers differ on who qualifies for medical coverage; while spouse are usually covered, non-spouses may not be so if one partner is still working, he or she should check with an employer about health benefits.  Life insurance benefits can be left to anyone.

Assets – Unmarried spouses do not qualify for the marital deduction when it comes to estate taxes, nor is the portability option available to couples who are unmarried.  Titling the home as a life estate is one option for unmarried couples to enable a surviving partner to remain in the home until they die, when the home would then pass to heirs.

Estate planning experts advise live-in partners to create a cohabitation agreement to protect each partner’s assets, with provisions to cover personal liability issues and debts.

With the proper guidance, you can protect your finances and spare your loved ones the frustration of having to make costly and difficult decisions.  Contact us for your free initial consultation at one of our conveniently located offices in Fort Pierce, Stuart, Port St. Lucie, Vero Beach, and Okeechobee.