‘I don’t like the thought of dying alone’: I’m 54, twice divorced and have $2.3 million. My girlfriend desires to get married. How do I shield myself?

I’m 54 years outdated. I’ve two older teenage boys, and I’ve been divorced twice beforehand. I personal 5 properties in Washington state price roughly $2 million. My 401(okay) is price $350,000. I make $150,000 per yr from a gross sales job and hire from my properties. Eventually, I’ll inherit two extra properties in Washington state and a few shares price about $1 million. I’ve paid into Social Security for 38 years and can obtain near the utmost payout. 

My 52-year-old girlfriend owns her own residence, valued at $500,000, and needs me to maneuver in together with her and marry her. I’m not offered on this concept, because it places me in danger financially. But I don’t like the thought of dying alone, both. She has shares price round $100,000. Her jewellery firm has $150,000 in debt and stock property of $20,000. It’s barely hanging on and makes $20,000 a yr revenue. She has solely paid into Social Security for 11 years.

She has by no means been married and has no youngsters. She comes from a rich household and can get a big inheritance in 20 years or so. If I do marry her, how do I shield my property and my Social Security advantages in case of divorce? A revocable belief? An irrevocable belief? A prenup? I’ve heard horror tales of individuals, principally males, shedding half of their Social Security in a divorce. I plan on working till I’m 70. I plan on leaving the overwhelming majority of my property to my boys.

Don’t Want to Die Alone and Broke in Washington State

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Dear Don’t,

You can’t lose your Social Security advantages in a divorce. You have paid into them, and they’re yours. A divorce court docket might take your advantages into consideration when splitting property, however you’ve paid into this program for the final 38 years, and people advantages are yours and yours alone. If you divorce, your partner can obtain her personal advantages primarily based in your Social Security contributions, however provided that you have been married for 10 years and she or he doesn’t remarry and is 62 or older.

Washington is a community-property state, so something you deliver into the wedding is separate property, whereas earnings through the marriage are thought of marital property. Those property would probably be cut up 50/50 within the occasion of a divorce. Gifts and inheritances are an exception to this rule. If your spouse inherited $1 million throughout your marriage, for instance, that cash belongs to your spouse. Whoever inherits, nevertheless, must show that the reward was to them alone.

You might place your rental properties right into a revocable belief to bypass probate; it could require paperwork and expense. You ought to keep away from utilizing marital funds for important upgrades to these properties. Unlike your rental properties, nevertheless, you’ll be able to’t put your 401(okay) right into a revocable belief. This would imply the account would must be retitled, which might result in important tax penalties. Listing your sons as beneficiaries would do the job simply the identical.

A prenup can tackle the money owed a partner brings into the wedding and, as such, could also be preferable to a belief on this occasion, says Neil V. Carbone, trusts and estates accomplice at Farrell Fritz PC.  “Another benefit of a prenuptial agreement over a trust is that it will require an open discussion and an eventual agreement between them — and, in most states, with the benefit of their separate attorneys — so there should be no surprises in the future.”

Irrevocable versus revocable trusts

Irrevocable trusts are fitted to people who’ve amassed important wealth. The federal estate-tax threshold for 2024 is $13.61 million for people and $27.22 million for {couples}, so you wouldn’t must pay federal property tax on quantities beneath that. It doesn’t look like you’re going to avail your self of Medicaid, so an irrevocable belief gained’t enable you to there, and should you set one up, you’d lose management of your property, because the title “irrevocable” suggests.

“A properly drafted irrevocable trust that is created and funded prior to the marriage should protect assets from a spouse as well as the creditors of both spouses,” Carbone provides.  “An important consideration, however, is that ownership of the assets must effectively and irrevocably be transferred to the trust in order to be protected.  The grantor has to give up control of the trust property to the trustee, who will determine whether and when to make distributions.”

“Also, not every state allows for so-called ‘self-settled’ assets protection trusts, that is, trusts where the grantor can also be a beneficiary of the trust while providing protection against the grantor’s creditors,” Carbone provides. “Asset-protection trusts can also be set up offshore, but doing so usually involves increased costs, which may be warranted when significant assets are at stake.”

So what’s the reply? Financially, a revocable belief, a final will and testomony and a prenuptial settlement ought to shield the lion’s share of your property, and might set out steerage associated to alimony and money owed. But a prenuptial settlement must be truthful and equitable, and it must be clear concerning the property and liabilities held by each events. It must also be entered into with out duress. There is not any assure {that a} prenup shall be enforced, however writing it with the steerage of a lawyer will assist.

Speaking of duress, getting married as a result of one social gathering needs to get married isn’t a purpose to get married. Getting married since you don’t need to die alone isn’t a purpose to get married. Getting married since you bought married twice earlier than and that is third time fortunate, and since it looks as if the appropriate factor to do should you’re courting somebody, can be not a purpose to get married. There is not any purpose it is best to get married for a 3rd time if it’s not one thing you need to do.

Love is an efficient purpose for most individuals to get married — and there are additionally tax benefits — however you’ll be able to love somebody exterior of marriage. This is a financial-advice column, nevertheless it’s usually a relationship column disguised as a financial-advice column, as a result of it offers with marriage, divorce, dying, taxes, inheritance and households. Signing a wedding contract is a giant step and, as you’ve found, it is without doubt one of the most necessary contracts you’ll check in your life. Financially, it merely might not profit you.

Just make sure you’re signing for the appropriate causes earlier than you are taking that step.

You can e-mail The Moneyist with any monetary and moral questions at qfottrell@marketwatch.com, and observe Quentin Fottrell on X, the platform previously generally known as Twitter.

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