Gray Marriage – it’s never too late, but plan wisely!

By Carolyn J. Woodruff, JD, CPA, CVA

By now, everyone in North Carolina has probably heard that Sharon and Ozzy Osbourne are most likely divorcing after 33 years of marriage. There has been an upturn in so-called “gray divorces” – where a couple divorces after the age of 50.  But, with gray divorces also come gray marriages!

Gray marriages are defined differently by different people, but generally persons over fifty who remarry may be considered gray marriages. Others don’t consider a marriage to be “gray” until a least one of the spouses is sixty or older.  Here are my topmost concerns for “gray marriages”—marriages for people over fifty.  You should go through each of these points, many of which can be handled in a prenuptial agreement.

(1)          Medical and other Basic Necessities:  Husband and Wife are financially responsible for each other’s necessaries, such as medical, housing and basic food.  Common wisdom is that you cannot necessarily contract around this Doctrine of Necessaries in a premarital agreement because the providers, particularly the medical providers, are not parties to the premarital agreement.   In my opinion, it is helpful in a Premarital Agreement (if the parties want the provision) to require the prospective Bride and Groom to put the Waiver of Medical Necessities on file with all health care providers.  It at least gives the provider notice that the other spouse may contest liability for necessaries.  Health care, while potentially expensive at any time in life, can become very expensive as we age.  Is this potential medical commitment one you are willing to take on? Of course, I’ve seen divorces happen over this issue of medical necessaries alone in persons in their eighties in order to preserve assets for estate planning.  This is tough stuff.

(2)          Wills and Estate: How will the marriage affect your Will and your estate planning?  If you predecease your new spouse without a waiver of estate rights in your Premarital Agreement, your new spouse will get a percentage of your estate established by North Carolina law.   Adult “children” often become contentious and unsupportive of Mom’s new squeeze,  if these adult “children” feel “Mom’s new husband will steal what they are entitled to.” As if this is not Mom’s money to do what she wants to with–LOL

(3)          Living arrangements: Will you establish a new household together after the wedding, or will the new couple be moving into one or the other’s already established home?  If possible and financially feasible,   I suggest starting over “fresh” with a new residence for both of you together—one you jointly establish.  Why?  The spouse moving in the pre- existing home frequently complains that the residence doesn’t really “belong” to him/her, particularly if that spouse doesn’t have his/her name on the deed.  And, pre-existing residences can have bad karma of a previous relationship, or even too many uncomfortable recollections if the spouse lost a prior or former spouse by death while living in the pre-existing residence.  If your legal name is not on the deed to the home, then your household furnishings that you move into the residence will likely not be covered by the homeowner’s insurance if a disaster happens, such as tornado, flood, fire, or hurricane. If you move into an pre-existing residence deeded to the other partner only, will you suddenly have to move out if your partner dies?  This needs to be covered in a premarital agreement if at all possible.

(4)          Income tax returns:  The government always has to be there in your marriage as a third party, like it or not.  Will your partner and you after the marriage file joint federal income tax returns?  Will this have a hefty price tag?  How will you allocate the taxes between you and your new spouse?   If your legal name is not on the Promissory Note and Deed of Trust on this home, then you cannot deduct the mortgage interest, even if you are paying half (or even more) of the mortgage payment.  The marriage penalty is alive and well, and quite costly in certain instances.  If you are contemplating marriage, you might have your CPA run some pro forma tax returns.  If the both the bride and groom to be are in the 28 percent federal tax bracket, the combined taxable income could cause extra income taxes, frequently call the marriage penalty.

(5)          Income discrepancy: If one partner is high net worth and the other partner is low net worth,  you as a couple can potentially make use of the unlimited marital deduction twice under current law, and that certainly could be an estate tax saving worth the wedding

(6)          Social Security:   If you were married to your former spouse for the required ten years, your Social Security should be evaluated based upon your first spouse’s social security earnings record unless you remarry.  If you remarry, you do not retain the social security benefits related to your first marriage partner.

(7)          Spousal Support: Are you receiving alimony from your previous spouse? If so, you will most likely lose that that payment.

Have a CPA evaluate the total cost of the marriage and not just the cost of the wedding party. You might be surprised.  At least you should know.