Our last article looked at possible financial benefits of remarriage; this week’s looks at potential financial drawbacks. Some risks are obvious. A future divorce can be very detrimental. In nine states with community property rules, most wealth or debt accumulated during the marriage may be divided equally. The remaining states typically follow equitable distribution; a judge divides assets, which may include one spouse’s pension. Here are a few other potential drawbacks:
Pensions and Social Security. A widowed individual who remarries before turning 60 will lose the ability to draw their late spouse’s Social Security benefits. Widows or widowers of public employees or military personnel could also lose their spouse’s pension or retirement if they remarry, particularly before a certain age. A divorced individual who was married 10 or more years and has been divorced two years can draw spousal Social Security benefits on their ex-spouse’s work record. But they’ll lose those spousal benefits if they remarry at any age until the second marriage ends in death, divorce or annulment. A surviving spouse can receive their deceased ex’s full benefit at the appropriate age – provided they were married at least 10 years and don’t remarry before the age of 60. (A spouse who remarries becomes eligible for spousal benefits from their second mate once they reach an appropriate age and have been married one year.)
Long-term care. Even some non-community property states hold a healthy spouse liable for their spouse’s medical expenses, including nursing home care. It may be more difficult for an individual who doesn’t have long-term care insurance to qualify for Medicaid coverage of nursing care if their spouse has a higher income. If one spouse must rely on Medicaid to pay nursing home bills, the assets a healthy spouse may retain will be limited. In 2016, the most a state can allow a healthy spouse to keep without a hearing or court order is one-half of their countable assets up to $119,220; the least a state may allow a healthy spouse to retain is $23,844. Up to certain limits, the couple’s home is not counted as long as the healthy spouse lives there.
Still other issues can arise. Marriage could put an individual in a higher tax bracket. Estate planning can be complicated, especially if there are children from a previous marriage. Contemplating marriage requires practical considerations; this is particularly true for older adults. We’d be happy to work with an attorney or accountant to help you or someone you know identify important financial issues and address concerns. To schedule an appointment for yourself or to refer a loved one, please contact our office.