Love and/or Marriage Later in Life

The Saturday New York Times usually has a "Personal Business" column with thought-provoking articles that touch on estate planning. Recently the feature was on older couples who choose to live together but not marry.   While the number of unmarried couples over 50 has more than doubled since 2000, there are many more who opt for marriage. Either way when a couple contemplates a union at an older age, there is a lot more than "love and marriage" to consider.


The decision to forego marriage for cohabitation has a number of reasons, many of them fundamentally financial. Whether or not there is a formal marriage, couples are advised to look into a pre-nuptial agreement that defines who brought what into the union, and how those assets will be disposed of in case of death or if the relationship is not successful. If there is a marriage, the written agreement will supersede state law on what a spouse is entitled to. Virginia has enacted a Uniform Prenuptial Agreement Law that recognizes those rights.


Then there's the tax angle. The Tax Payers Relief Act of 2012 (ATRA 2012) brought a number of new taxes into existence, with varying thresholds of when they take effect. There is a noticeable "marriage penalty" because the threshold for a married couple is not twice the threshold for a single person, but generally a difference of $50,000 in adjusted gross income or taxable income, depending on the tax.


Then there's the practical angle. If a couple is not married, neither has a statutory right to make medical decisions or financial decisions in case of incapacity. A properly executed Advance Medical Directive and Durable Financial Power of Attorney can take care of that contingency.


The estate planning considerations also come into play. In most states, spouses cannot disinherit each other completely, unless there is a pre-nuptial agreement in place. The intent may be for each spouse to leave his estate to children of a prior marriage, but that requires creating a will or trust to name the children as beneficiaries. Given that less than 40% of Americans have gone to the effort to create an estate plan, there's a substantial probability that a spouse's estate will pass according to the home state's laws of intestacy, making the current spouse a beneficiary. Not being married means the children of the prior marriage are the beneficiaries.