Dear Michael: My wife died a few years back and I've been thinking about getting remarried. Outside of the normal family issues that arise with a new wife – and with kids from a prior marriage – what other things do I need to consider? She has considerable assets of her own and I farm together with my son and daughter-in-law. We're not two moon-eyed kids, so tell it to us straight what we need to discuss and get on paper before we get married – Second Time Around
Dear Second Time: Congratulations on finding someone to spend your life with. It's good to see.
As per your questions – things to discuss and what things need to be done prior to the marriage? I'll talk about those as well as things you need to do after the marriage – or things you can do after the marriage if you forgot to do them before!
First of all, everyone has heard of a pre-nuptial agreement. Pre-nups are essentially agreements that state what each of you had before you got married gets to stay yours if you don't stay married and/or (perhaps more importantly) after you die.
In order for a pre-nup to be valid, both of you should have separate attorneys – each representing one of you. Once you've come up with a list of all of your stuff and she's come up with a list of all of her stuff, your attorneys can exchange lists and make certain nothing looks out of place and nothing is forgotten. Things like mineral acres. I bet those have come up a few times in the last few years.
Once everyone has agreed who owns what – and you complete this in a ‘reasonable' period of time before the wedding (don't slide it under her dressing room door as she's getting into her wedding gown!) – everyone can sign on and get ready for the big day.
The reason these agreements are so important is because very few people think beyond the person they are marrying. Divorce is what everyone focuses on, but death can really be the issue.
What happens if you die – without a pre-nup agreement – and your spouse's affairs are being handled by a power of attorney, or one of her children, or any number of people who have the official capacity to make decisions for her (Medicaid)? You and your new spouse may have had no intention to split assets at death. You may have both written a will being very explicit about not having assets pass to her children – or her assets to yours.
If someone else is pulling her strings after you die, or she is deemed incompetent or is being manipulated, after your death, most state laws allow the spouse (or her caretaker) to keep up to fifty percent of the estate plus a spousal allowance (typically one hundred and twenty thousand dollars in assets in addition to the fifty percent).
Most people when they get married the second time later on in life are mature enough to have the “talk” about who owns what and who gets what, but unless it's written into a pre-nup, just writing wills won't do the trick – unless you're "lucky” enough to go on the same day!
The other thing about pre-nups is they have to be managed after the marriage. If you have a single joint account, or even if you have separate accounts and both of you contribute to one account, you have to be very careful how you spend money out of that joint account.
For example, you may have a pre-nup, but if you write checks out of a joint account for land taxes, insurance, upkeep, maintenance or any other costs of "ownership', you are likely on your way to voiding your pre-nuptial agreement. Why? Because if your spouse is "contributing” towards these costs, then it can be argued she must have had ownership in the assets.
Best idea – keep separate accounts for your separate assets. When you receive income from your assets, deposit the income into this account, pay the bills for the ownership issues from this account, and then decide how much each of you want to contribute to a joint account for living expenses and things you want to acquire jointly. Every time you get a bill, decide if it's your expense for your stuff, an expense for her stuff, or something for both of you and then pay from the correct account.
June is the month for weddings – so plan ahead – and have a wonderful marriage.