When a Marriage Ends

News of the Bill and Melinda Gates divorce, and the enormous cost of such an action, are a reminder that whether by death or divorce, all marriages will legally end and the preparation for such should be part of every financial plan.

I remember in my youth first hearing the phrase, “Prenuptial Agreement” or Prenup. I always viewed a marriage as an “all-in” proposition and the idea of holding something back, usually money, I found offensive. I was not alone in my thinking and in the early days, a prenup seemed a thing for Hollywood stars who sometimes viewed marriage as a temporary arrangement. For normal people, marriage was ‘till death and any hesitation on being fully committed would be viewed negatively by the other party.

My years in this business have taught me to view the once despised prenup as a necessary tool to be implemented in situations where it is warranted. And by that I mean, in a later life marriage. Traditionally people marry when they are young and broke, and everything they have has been built together. But as lifespans have increased, and wealth with it, it is very common to see second and third marriages among people who bring substantial assets with them.

When I am involved in the process, I still sometimes see a reluctance to plan the financial aspects of acquiring a new spouse, including trust agreements, expense sharing and even a prenup. The main issue is not about the two people involved because they are in love and usually want to freely share everything, but it’s the heirs they leave behind who often see it much differently. A second marriage almost always means another set of heirs brought into the picture. When that marriage ends through death or divorce, the beneficiaries can find themselves in very difficult, and expensive legal battles. Thus, my advice on later life marriages regarding financial matters is fairly straightforward. Keep most of your assets separate. If you don’t do it for yourself, do it for your heirs who may be left fighting it out with other children they may not even know, and who they certainly didn’t choose.

I recently watched the passing of a very kind friend whose children were blindsided to learn that the inheritance their father was excited to leave them, had been lost to their fathers’ second spouse. It wasn’t his plan but out of kindness, he had allowed all his assets to be combined into their joint accounts. On his passing the court gave everything to the new spouse who then willed it to her own children.

There is nothing unloving or selfish about preserving for your children an inheritance. There is nothing wrong with adults in a second marriage keeping most of their assets separate so that a smooth and peaceful transition to their own individual heirs can happen. Whatever your desires, plan well so that your assets will go where you want them to go, and not where a court decides to send them.