Image for pre nup article Elder Couple Checking Their Finances
Image for pre nup article Elder Couple Checking Their Finances

Congratulations on finding love again and deciding to remarry. Seniors are remarrying in record numbers. Perhaps your divorce  occurred when you were in your 50s, 60s, or even later, or your marriage may have ended with the death of your spouse of many years. You are older now, and have assets, retirement accounts, a home, and perhaps a business. Very likely, you each have grown (or almost grown) children from your prior marriage. Understandably, you and your future new spouse may be very concerned about the financial consequences of your upcoming marriage. Depending on your situation, you may want to consider having a “gray” prenup before you remarry.  

Balancing a legacy for your children with protection for your new spouse. 

One of the major concerns that seniors have when remarrying is how to balance their financial loyalty between their new spouse and their children from their previous marriage.

Many seniors remarrying want to leave a legacy to the children of their first marriage when they die. Depending on their financial situations, they may are also be concerned about protecting the financial security of their new spouse.  Balancing these interests is an important way to create harmony and trust in the newly blended family and to demonstrate care for both your children and your new spouse.

Some ways to achieve this is for the senior to divide his or her estate between their children of a previous marriage and the new spouse. But since estate plans can be changed at any time, a prenup could be a good way raising and addressing this issue with your new spouse. You can mutually set the requirements of the new estate plan in a binding contract – the prenup.

The prenup could set a minimum “floor” on transfers to each other upon death, which can be exceeded if one wishes.  All or some of the assets designated for the surviving spouse can be put into a credit shelter trust or QTIP trust. These trust assets can be used to support the surviving spouse during that spouse’s remaining lifetime, with the remainder going to the children of the prior marriage.

What funds or income will the newly-formed senior couple use to provide for themselves and pay their expenses? 

In a prenup, a gray couple can decide how they will support themselves during the marriage. They can make a cohesive plan for withdrawing retirement assets, depending on their relative wealth. For instance, if one of the spouses has a very large retirement plan, and the other does not, the couple can make a mutual decision to rely more heavily on the larger plan.

The couple can commit to sharing household expenses equally, or in proportion to their income or assets. Many couples do this informally, and can make decisions without wishing to memorialize them in a prenup.  Others may want to set these plans out in a prenup. Having some discussions about these issues (and sometimes a written commitment in a prenup) can be useful for couples.

Prenups can also set the terms of how the new couple will financially assist their children from their previous marriages. Will there be lifetime gifts made equally to all of them? What if one child needs more help than the other children? What funds should this assistance come out of – previous premarital assets or assets and income earned and accumulated during the marriage?

What happens if there is a divorce?  

Divorce terms are a big topic for people marrying again. Divorce is not fun, and some people remarrying have had a trying and difficult divorce experience in the past.

A gray prenup can set into place a fair and reasonable financial result if the marriage ends in divorce. This should entail careful thought when one of the parties to the marriage is not financially secure.  A prenup that shows loving care at the beginning of a marriage by making adequate plans in case the marriage ends in divorce, may have the effect of making the new marriage even stronger.

In addition, a prenup can reduce or eliminate the risk of litigation if the new marriage ends in divorce. This is because an alternative dispute resolution (ADR) method such as mediation, collaborative law, or arbitration can be written into the prenup as a requirement to address disputes. This solution also works to address conflicts that might arise between a surviving spouse and the administrators of the deceased spouse’s estate if the marriage ends with the death of a party rather than by divorce. 

If you decide to have a prenup, make the process gentle.

People want the best for the person they love – that includes providing security and a fair financial result even if the marriage ends in divorce. Marriage relies on a great deal of mutual consideration and trust. Planning for a thoughtful and equitable prenup is giving your intended spouse “consideration” in the broadest sense of the word.