Marrying love and money in later life

With more couples tying the knot after the age of 50, Holly Thomas examines how to protect each party’s assets

Tying the knot later in life is becoming more common. The most recent data from the Office for National Statistics show that a fifth of marriages are now between those aged 50 and over.

Along with a new lease of joy and happiness, marriage – or a civil partnership – can bring a side-helping of financial complexity.

Often, one or both of those marrying in later life will have been in previous marriages or relationships, perhaps involving children. More than half (56pc) of those getting married over 50 have been either widowed or divorced.

While this isn’t the case for everyone, there are important decisions to be made concerning finances, assets, housing and retirement, as you will both have built up your own level of wealth and assets, and perhaps debts. even more so if you have been married previously or have dependants.”

He suggests carving out some time to make each other aware of your financial situations, whether that’s debts, or financial ties from previous relationships – as well as sharing financial goals for the future and retirement.

He adds: “You’ll want to ensure you’re on the same page for your future plans, whatever that looks like, and then budget accordingly. This includes saving for any bucket-list activities like travelling, as well as aspects like paying off your mortgage, living costs, supporting children and care fees.” at a lower rate than the other, you could cut your collective tax bill by switching assets to the lower-earning spouse.

There are tax benefits that come with a marriage. For example, you can transfer any unused personal allowance to your spouse using the marriage allowance.

To use this, one member of the couple must earn less than the personal allowance of £12,570, and the other partner must be a basic-rate taxpayer (earning up to £50,270). The lower earner can effectively transfer £1,260 of their personal allowance to their spouse, increasing their tax-free income as a couple.

Being married or in a civil partnership also means that you have double the capital gains tax allowance of £3,000 for the current tax year.

You can also double your inheritance tax (IHT) allowance. Any unused portion of IHT allowance within the £325,000 nil-rate band after death can be passed on to the surviving partner. divorce. On divorce, a court has the power to share the assets to meet respective needs, regardless of ownership or how an asset was acquired. The family home will usually be considered a marital asset to be shared regardless of its source. If you want to protect certain assets – such as a property – in case of a divorce, you may need to have your spouse agree to a prenuptial agreement.

Of course, divorce may not become an issue, but thinking ahead, if you buy a property together, your share of the house will automatically pass to your other half on death.

Should you wish to leave the value of your proportion of a property to your children or someone else, the common way to do this is to change how you own your property and become what’s known as “tenants in common”. This way, your share of the property is recognised as separate to that of your spouse. You could then gift your share to your children, or put it into trust.

Unused tax-free personal allowance for income that can be transferred to a spouse

Additional capital gains tax allowance for a couple, versus a single person

Extra nil-rate band allowance for a couple, potentially doubling the value of a home that can be inherited tax-free

Your retirement plans might change when you marry later in life. If one spouse is closer to retirement than the other, this could mean existing gameplans need revisiting.

If you have a private pension, you might want to make sure the “nominated beneficiary” is up to date so that the right person gets your pension pot when you die. You can do this by updating the “letter of wishes”, which is held with your pension provider.

You should do the same for any work pensions, if either or both of you are still employed or not taking pension benefits yet. This might also be a good time to consolidate your pensions – doing this can help you get a better idea of your overall pension savings, and may be easier to keep track of. Make sure that transferring the money doesn’t mean giving up any benefits, or incur large charges.

For state pensions (and benefits), in some cases, your entitlement may change if you get married or remarry, so make sure to check so you’ll know in advance of any significant changes to your income. If your spouse or civil partner dies, however, you might be able to increase your state pension, depending on the date of birth of your partner. You could inherit from 50pc to 100pc of your deceased partner’s state-related pension.

To protect the assets built up before you met, you might want to have something in writing about what would happen should you split in the future. A prenuptial agreement is a contract to outline ownership of your assets and details what would belong to who, should the marriage break down.

Interest in prenuptial agreements in Britain is rising, according to Caroline Keeley, partner and head of family law at TWM. She says: “Inquiries have multiplied dramatically in the past couple of years. The increased use is partly being driven by people entering second marriages who want to protect their assets for the children from their first marriage.”

Keeley highlights that a prenup is not only about protecting current net worth, it’s also about protecting potential future wealth.

“If you’re an entrepreneur with a growing business, or an executive with potentially valuable share options, you may want to prepare a prenup to protect the windfall you might get from the sale of that business. You can also protect potential future inheritances.”

Prenups are not just about safeguarding the assets of the financially stronger party, it’s also about protecting the other person in the relationship and giving them a degree of security.

Keeley recommends leaving plenty of time to draw up a contract: “Aim to contact your solicitor at least three months before your wedding,” she says. “This ensures time to gain a general understanding of matrimonial law and draft an agreement you are completely satisfied with before it is sent on to your partner who should then follow the same steps with their solicitor.

“For a prenup to have legal weight it needs to be shown that both sides knew what they were signing, which is why showing that legal advice was given is essential.”