How Can Large Age Gaps Impact Couples?

Couples with age gaps
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Marriage age gaps make a difference in estate planning.

Weddings are joyous occasions.

For those who choose to celebrate their marriage surrounded by friends and family, weddings require a lot of preparation.

Beyond the wedding itself, marriages require thoughtfulness and communication about a variety of topics.

According to a recent Barron article titled “Couples with Big Age Gaps Require Special Attention,” estate planning is one such topic.

Couples with age gaps require more specific planning.
Age gaps can make estate planning and retirement planning more complicated.

Although having an estate plan is important for any couple, it is especially essential to those couples with large age gaps.

These specific considerations include who will inherit when the older spouse dies as well as planning for health care costs.

Many retirement and estate planning concerns are more complex with these big age gaps.

What are some of these concerns?

Social Security and retirement account considerations differ.

The timing of when the older spouse takes Social Security may impact the benefit for the younger spouse.

When the younger spouse turns age 62, he or she will be able to claim Social Security.

This person can either claim his or her own Social Security or a portion of the Social Security benefit of the spouse.

This younger spouse can claim the larger payout.

If the older spouse waits until age 70 to claim Social Security, the younger sister will be eligible for a larger spousal benefit and survivors benefit.

Pension plans need to be reviewed.

Although fewer jobs now have pension plans, those who work in careers with this benefit will need to review the terms of the plan.

If the plan has a survivor benefit, then the spouse who dies second will be eligible to receive benefits in the future.

When it comes to spouses with significant age gaps, IRAs may have different distribution rules for beneficiaries.

The IRS may let individuals use the Joint Life and Last Survivor Expectancy Table rather than the Uniform Lifetime tables if the only beneficiary is a spouse who is younger than the other spouse by more than ten years.

What does this do?

It provides the opportunity for a smaller Required Minimum Distribution than would typically be allowed.

This means the account will last the surviving spouse longer, with lower taxes along the way.

Pretty cool.

The inclusion of trusts in the estate planning should be discussed.

Trusts can be beneficial in many circumstances.

Often marriages between spouses with large age gaps include children from previous relationships.

Trusts can protect these children and future children.

In instances where one of these children has special needs, a supplemental needs trust would benefit such child as well as the whole the family.

If an inheritance is left directly to this child, he or she could forfeit eligibility for government benefits.

Then, if eligibility is reinstated, then any inheritance left at the death of that child passes to reimburse the state for all benefits provided during the lifetime of said child.

Although many families create an ABLE Savings Account to allow assets to grow tax-free without compromising eligibility for governmental programs, there are even limits to these accounts.

For moneys in excess of these limits, a supplemental needs trust is helpful.

When creating any trust, you can have a family member or a professional serve as a trustee.

For those who are not married to their partner, each partner will need his or her own estate plan and may require revocable or irrevocable trusts to protect and provide for each other and any children.

Whatever the situation, couples with larger age gaps should work with an experienced estate planning attorney to create a plan to meet their specific needs and concerns.

Reference: Barron’s (July 27, 2021) “Couples with Big Age Gaps Require Special Attention”

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