LOVE IS EASY THE SECOND TIME AROUND… RIGHT?
Neal A. Deutsch, CFP®
Published in Rivertown Journal, June 2008
Love is like an earthquake--unpredictable, a little scary, but when the hard part is over you realize how lucky you truly are. Falling in love for the first time is easy. It's the second time around, after accumulating assets, belongings, and children that it becomes a bit more complicated: “do-overs” were a lot easier when we were in the single digits! In the movie world, a “do-over” is as easy as Michael J. Fox driving a DeLorean backwards in time to meet his own parents before he was even conceived. In real life though with regards to estate planning, it’s a bit dicier.
Young newlyweds have simple decisions: how to merge a music collection, your couch or mine to furnish with, or deciding between Mickey D’s or Wendy’s for the big night out. It was simpler- there was less stuff. Marriages for older folk bring a plethora of situations and issues to deal with. Planning in advance can greatly promote family harmony: lack of planning can sound like screeching cats. Personally, I prefer the harmony route…
A marriage of later years is not unlike entering into a business relationship. It takes agreements, foresight and planning. Each of the parties enters into the relationship with their own belongings, which most often at this stage in life are of value, both monetarily and emotionally. They say death and taxes are the two issues we have no control over, and I agree- we never know when we will leave this earth. Proper planning before that time is crucial to a calming lifetime of marriage. I have seen all too often families torn apart fighting about material objects and money. Most often, this occurs when the deceased did not leave behind sufficient legal documentation to assure that his or her assets were to be distributed in a fair and equitable manner. In the case of a second or third marriage, the conflict occurs when the funds are needed to continue to support the surviving spouse, and the children of the previous marriage think they deserve it first. Hence, the battle is on. All this can be avoided with a bit of estate planning while everybody is healthy, happy and in love.
Before entering into a new, permanent relationship be sure to talk with your partner to discuss your expectations when the final day comes. Talk about who and how you would like your estate distributed, and who you would like to receive a part of your legacy. Remember, upon the passing of a spouse, there will usually be a surviving spouse that still needs to be supported. If you truly feel that the asset should go to the children of the previous marriage, consider a trust which will pay income to the surviving spouse, with the principal eventually going to the intended children.
Consult your Certified Financial Planner and Attorney to assess your estate, and help you design a Pre-nuptial agreement to avoid problems later on. There is no shame in this, and don’t feel that you are insulting your partner- it’s about respect for your past life and achievements, as well as bringing integrity into the relationship. Consider keeping your pre-marriage assets separate to assist in identifying them later on life. Check you IRA’s and pension plans- are the beneficiaries correct for this point in your life? Remember: your IRA can be rolled over tax free to a spouse only, not to the kids…and while you are at it, when’s the last time you checked your beneficiary on your life insurance policy? Let’s make sure it not still your ex! Ultimately, it’s not about dollars and cents. It’s about family harmony and living a peaceful existence in your new marriage or relationship. An estate with no planning leaves behind a mess for those still here to clean up- it’s not how you want to be remembered. If you have not done your estate planning, or it is more than 5 years old, contact your planner to review it or set your plan in motion. Remember: “To love is to receive a glimpse of heaven: to leave without the proper estate planning is a glimpse of …” well, you get the picture! Stay healthy- see you next month.
Neal A. Deutsch is a Certified Financial Planner™ & Registered Securities Principal, offering securities through First Allied Securities, Inc., member FINRA/SIPC. Neal is President of Chestnut Investment Group in Suffern, NY, helping people with financial planning since 1984. Please feel free to call Neal at 845.369.0016 or email him with your questions at neald@chestnutinvestment.com. Visit his website at www.chestnutinvestment.com
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