The financial implications of getting married in later life
The latest data from the Office for National Statistics (ONS) reveals more and more people aged 55 and over in England and Wales are getting married – whether they were single, divorced or widowed.
The numbers peaked in 2012 when more than 20,000 men aged 55+ tied the knot and nearly 13,000 women got married in their late 50s.
Whether you’re marrying in later life for the first time or you’re getting remarried, there are various financial implications you need to be aware of and steps to take to protect your assets.
One of the most important points to note is that any previous will is voided upon marriage, unless it is made in contemplation of marriage or a civil partnership.
If you die with no valid will, you die intestate which means your estate will be divided according to intestacy rules.
Under these rules, if there are no children from a previous marriage, everything automatically goes to your new spouse/civil partner.
If you remarry and have children from a previous marriage, but no will is made, your partner inherits the first £250,000 of the estate, plus all personal possessions, and half of the remaining estate. The other half of the estate goes to the surviving children or their descendants.
If you remarry and have a will at the time of your death, the estate usually passes in accordance with the wishes expressed in your will.
Peter Savage, chartered financial planner and business principal at Fairstone Northern Ireland, says: “Marriages in later life do happen and it’s important to carry out the financial planning around it. You have to be aware of what your intentions are and how your assets are distributed upon death.”
Most pension funds are held outside of your estate and so are not covered by your will. That’s why it’s important for anyone who gets married in later life to revisit or fill-out a pension nomination form to make provision for their new spouse or civil partner. You may also want to make changes to the way your assets are distributed among previous children or other family members.
There have been some changes to how benefits are paid from a pension when an individual dies, which is also another reason why it’s essential to review your pension nomination form, according to Savage.
If the person who remarries dies before the age of 75, the pension would be paid out tax-free to the nominee. If they die after the age of 75, the money paid out would be taxed at the beneficiary’s marginal rate of income tax.
How property is treated upon your death depends on how you own the assets and whether you want to make provision for an ex, new partner or children from a previous marriage, for instance.
If you own your own property outright and you’re due to remarry and want to get your new partner on to the mortgage and title deeds, you need to ask your existing or new lender to carry out a ‘Transfer of Equity’.
Simon Collins, product technical manager at mortgage advice and broker, John Charcol, says if one member of the couple owns property, you should both seek legal advice to protect your property and equity, especially regarding whether to put the ownership (deeds) as joint tenants or tenants in common.
Joint tenants is where in the event of the death of one of the owners, their interest automatically gets transferred to the remaining surviving owner. Tenants in Common allows you to set the share of the property each of you own, eg 80/20 and there’s no automatic transfer to the other owner if you die, so you can decide in your will, who you want your share to go to.
“These arrangements are independent of the mortgage, as all joint mortgages are what is known as ‘jointly and severally responsible’, which is to say that both borrowers are equally liable for 100% of the monthly mortgage payment, irrespective of any individual agreements they may have with each other,” Collins explains.
If a property owner who’s getting remarried wants to make provision for children from a previous marriage, the tenants in common structure would enable them to have their share transferred to children in the event of death, though Collins adds that a new partner would also have to agree to leave their share to the partner’s children upon their own death.
If you bought a property with a former partner as joint tenants, upon your death it would pass automatically to the other owner – even if this is your ex-husband or ex-wife. If you bought a property with a former husband or wife as tenants in common, each owner has a fixed stake in the property.
“If an ex is on the mortgage, they may decide they want to come off the mortgage. If you, as the person living there, can afford the mortgage in your own right this could be a good option. But if you can’t afford it on your own, you may need someone else, such as your new partner, to be put down either as a joint tenant or as a tenant in common. As tenants in common, it allows you to protect your equity much more as you each own a percentage of the property.”
Again, if an ex wants to come off the mortgage and a new partner/wife/husband wants to come on board, you would need to do a ‘Transfer of Equity’.