Tying the Knot in Retirement: Do You Need a Prenuptial Agreement?

Creating a prenup can cause each party to more fully examine and disclose their financial situation in a new marriage that is based on transparency and understanding.

In cases where remarriage occurs relatively late in life, the following scenario is as common as it is fraught with legal and family complications.

After losing his wife of 40 years, John developed a close friendship with Mary, whose husband passed away after a similarly long marriage. They attended the same church, held compatible values, and had the same circle of friends. Their relationship emerged from parallel seasons marked by grief, loss, loneliness, and a desire for companionship.

Their lives were relatively simple and free of financial and legal stress. When they decided to get married, having a prenuptial (or premarital) agreement was the farthest thing from their minds.

However, in contrast to the tranquility they felt as they again experienced the joy of marriage, concerns quickly surfaced among their adult children.

Avoidable Disagreements

With good reason, remarriage can be an awkward topic of discussion - one that a senior parent might not want to initiate due to fear of how their kids will react, and one that adult kids might be eager to raise if they suspect that their inheritance is at risk.

Estate controversies arising out of remarriage often are rooted in a parent's hope that, after their death, their children and their surviving spouse will agree on how personal assets are to be distributed, and that any disagreements will be settled amicably. In too many cases, that is little more than wishful thinking.

Even when families are not particularly wealthy, there may be financial and beneficiary issues that need to be sorted out in advance, so that assets that are intended for one spouse's kids and grandkids aren't misdirected or needlessly expanded due to oversight or poor planning.

The Value of a Prenup

Whether you are the parent who is planning to remarry, or you are an adult child of that parent, you should consider the benefits of the parents meeting with their financial advisor and estate planning attorney, to walk through the best way to reaffirm and preserve the parent's intentions and to protect the legitimate interests of everyone involved.

The review and possible update of each parent's estate plan is a fundamental step in this process. To take it a step farther, the nature of each parent's assets and estate planning objectives may make it appropriate - perhaps even critical - to draft a prenuptial agreement that integrates the wishes of both soon-to-be newlyweds.

Not only can this process provide a valuable legal document; it can also cause each party to more fully examine and disclose their holdings, their sources of income, and their obligations en route to a new marriage that is based on financial transparency and understanding.

Adapted from the Daily Plan-It newsletter

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