Before They Tie The Knot, Ask Them to Ink the Plan

Few things can imperil a marriage faster than differences over money. The tolling of the metaphorical wedding bell, which once united bride and groom in marital bliss, may later turn into a warning bell for one spouse, signifying the urgent need to prepare for retirement. For the other, the bell might herald winning the jackpot at the local casino or deals to be had at a department store grand opening.

The danger of a financial rift leading to a break-up, advisors say, is potentially greater among boomer couples who remarry than among 20-something newlyweds. One reason: With retirement age closing in, and greater assets and debts to manage, remarrying boomer couples have more at stake.

“You don’t want to wait to ask about your prospective spouse’s retirement plans until after you’ve tied the knot,” says Joslyn Ewart, a financial planner and certified divorce financial analyst with Entrust Financial, Wayne, Pa. “[Boomers] who are planning to remarry often avoid money questions because they feel the probing will create hard feelings. But it could be too late when they discover that the spouse-to-be hasn’t prepared at all.”

Carol Ann Wilson, founder of the Financial Divorce Association of the financial planning firm Carol Ann Wilson LLC, Longmont, Colo., agrees, adding that boomer newlyweds need to invest time putting together a workable savings plan. That’s all the more crucial in cases where one of the spouses is a spendthrift — and prepared to unload a mountain of debt on his or significant other.

That outcome is less likely, advisors say, where one of the spouses is determined to keep personal finances separate, often because of bad experiences during a first marriage. Typically, advisors say, newly married couples will use informal approaches to maintain a division of assets.

Initially, this may entail keeping separate checking and credit cards accounts; and, perhaps after some years, establishing a joint account for mutual expenses. Or they might simply agree that certain debts — a student loan, business loan or second home mortgage — will be repaid by one or the other spouse.

“Debts, which I see enormous amounts of, can make for a tough situation,” says Wilson. “If, say, the husband brings a huge amount of debt to the marriage, he might agree the debt will always be his and that she will never share in it. But a court could decide [in the event of divorce] that the debt is jointly held.”

Hence, the value of a prenuptial agreement. Though not widely used except among the high-net-worth, a “prenup” commonly provides rights to spousal supports during or after the dissolution of marriage, plus provisions for the division of property should the couple divorce.