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Second time around? Sign a prenup

By Jennie L. Phipps ·
Wednesday, November 20, 2013
Posted: 2 pm ET

“Gray divorce,” as sociologists call it, is on the upswing with the divorce rate among people 50 and older doubling between 1990 and 2010, according to a study of U.S. Census statistics by the National Center for Family & Marriage Research at Bowling Green State University.

Add that to the fact that the study also found that people who remarried were more than twice as likely to divorce as people in first marriages, and you might conclude that taking the plunge again — especially when you are old enough to know better — is risky business.

If you're past 50 and getting remarried, make sure that a prenuptial agreement is among your retirement planning documents, says Benjamin Sullivan, a Certified Financial Planner professional with Palisades Hudson.

While nobody gets married -- especially post 50 -- thinking that the marriage will end, it obviously happens. Having a prenuptial agreement protects your retirement savings in the event of a divorce. Without one, you might have to share the assets you brought to the marriage, and you could face big legal fees, Sullivan says.

Across the nation, 27 states have adopted a Uniform Premarital and Marital Agreements Act, which spells out some requirements for the agreement to be enforceable. One of them is that it must be signed well in advance of the marriage, and it must not be "grossly unfair." Among the provisions that Sullivan thinks an over-50 couple might consider are:

Alimony. If the marriage comes to an end, will either couple expect alimony? If one spouse agrees to pay alimony in the event of divorce, how will calculation of the amount be affected by previous obligations to pay alimony? You don't want to spend all your retirement money on alimony.

Life insurance. One way to help make sure that the spouse who is bringing fewer assets to the marriage doesn't lose a comfortable lifestyle in a divorce is to mandate life insurance, with the better-heeled spouse — who is often older and more likely to die first — paying the bill.

Think about taxes. If some assets are to be divided in the case of divorce, take taxable status into account. For instance, all things being equal, a taxable individual retirement account is worth more to a lower earner than to a higher earner, so the higher earner might choose to keep the Roth IRA and cede the traditional IRA to the divorcing spouse, even though the Roth has less money in it.

Get your estates in order before you marry. Consider how the money will be distributed to children from prior marriages. For some people, it might even make sense to distribute part of the money before you marry, Sullivan says.

These situations can be complicated, Sullivan says. Sometimes on examination, they can be so complex that marriage may seem like more trouble than it's worth.

"Staying single is a legitimate planning idea," he says.

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