Advice for “grey” newlyweds

“Unfortunately, if you end up getting a divorce, marriage is the biggest financial decision of your life,” Ornstein says. “With all the focus on the social and emotional elements of marriage, too many people forget the financial element.”

The older the newlyweds, says Asher Tward, vice president of estate planning with TriDelta Financial Partners Inc. in Toronto, the more complicated the financial planning element of their marriage becomes.

“Before you can begin preparing a financial plan,” Tward says, “you have to evaluate the family dynamic. Are there kids from former marriages? Are [the newlywed couple] going to have new kids? What’s the dependency of the former spouses?”

Once those questions are answered, you can begin to broach the following areas for discussion with the older newlyweds:

– Prenuptial agreement

Financial advisors with older clients who are about to get married should always be thinking “prenup,” says Jean Richard, vice president and consultant with Toronto-based BMO Nesbitt Burns Inc.‘s wealth-management group in Montreal.

“If everything in a marriage goes well, Richard says, “your client won’t need to plan for its end. However, if it doesn’t, a plan can save your client from financial ruin.”

A prenuptial agreement, the prenup, is a marriage contract. It is similar to a shareholders’ agreement in which business partners address financial issues before entering a business endeavour.

The prenup is drafted prior to the couple getting married, and can be used to address the division of assets and spousal-support obligations in the event of a marital breakdown.

“For a prenup to be valid,” Richard says, “it should be signed as many months in advance of the marriage date as possible.”

Although signing a prenup isn’t a very romantic concept, Richard says, it is necessary for you to discuss this document with your client to ensure his or her financial assets stay intact should the marriage break down.

Says Richard: “It says, ‘What’s mine is mine and what’s yours is yours.’ And that’s the best groundwork for going into the union.”

– Estate planning

Older couples should revisit wills and estate plans before getting married, says Jonathan Sceeles, a financial planner with Mississauga, Ont.-based Edward Jones.

“With an older couple,” Sceeles says, “you don’t know what can happen. Updating the will ensures the estate goes to the intended partner.”

Depending on the family dynamics, estate planning can be a delicate process for the new couple and any children they may have from former marriages. One way to keep the estate-planning process fair to new and existing family members is to use an insurance strategy known as “estate equalization.”

“Using this strategy,” Tward says, “you would have an insurance structure in place that equalizes the value of the inheritance for both parties.”

For example, let’s say a 60-year-old male client runs a successful business worth $1 million and would like to leave it to his son, who also helps to run the company. At the same time, the client would like his new wife to receive a portion of his legacy without forcing his son to split the value of the business with the new wife. The client could purchase a $1-million permanent-life insurance policy, with his new wife as the beneficiary.

“This helps to prevent any part of the family from feeling resentful,” Tward adds.

Clients also should look at their bank accounts, Sceeles adds: “A joint account with joint tenants with rights of survivorship ensures that if one partner dies, the other becomes sole owner of the account.”

– Retirement

When a client gets married, Sceeles says, it’s important to look at whether his or her asset allocation is appropriate once the new partner enters the picture. Consider the partner’s portfolio, he says, and rebalance to fit the couple’s needs together.

Also consider cash flow and spending habits. “One person in the couple might be a saver, while the other is a spender,” Richard says. “Coming together later in life forces both [spouses] to re-evaluate their habits.”

– Insurance

For newlyweds marrying later in life, protecting financial assets is as important as building assets, Tward says, especially when there are children and support payments involved.

“Most couples are reliant on both incomes,” Tward says, “which makes protection for each of the spouses equally important.”

The amount of life insurance the couple needs will depend on the types of protection they have included in their estate-planning process, Sceeles says, as well as any policies they have in place from former marriages.

“It’s not always easy to discuss these matters,” he adds, “but doing so helps to build the foundation for a successful marriage.”

Income protection, in the form of critical illness and long-term disability insurance, also should be considered. ing habits. “One person in the couple might be a saver, while the other is a spender,” Richard says. “Coming together later in life forces both [spouses] to re-evaluate their habits.”

– Insurance

For newlyweds marrying later in life, protecting financial assets is as important as building assets, Tward says, especially when there are children and support payments involved.

“Most couples are reliant on both incomes,” Tward says, “which makes protection for each of the spouses equally important.”

The amount of life insurance the couple needs will depend on the types of protection they have included in their estate-planning process, Sceeles says, as well as any policies they have in place from former marriages.

“It’s not always easy to discuss these matters,” he adds, “but doing so helps to build the foundation for a successful marriage.”

Income protection, in the form of critical illness and long-term disability insurance, also should be considered.

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