Tying the knot later in life is becoming more common. The most recent data from the Office for National Statistics shows that a fifth of marriages are now between those aged 50 and over.
Along with a new lease of joy and happiness, marriage – or 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 separately built up your own level of wealth and assets, and perhaps debts.
Here, Telegraph Money explains the key things to think about, and how to protect your assets.
Be open when you talk about money
Before saying your vows, and before taking any action regarding your own finances, it’s a good idea to have open, frank discussions about money with your partner.
David Murray, financial planning expert at Abrdn, said: “It’s always important to be honest and upfront about your finances with your loved ones but in particular when entering into a marriage or civil partnership – and even more so if you have been married previously or have other financial 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 added: “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.”
What to do with your investments
It is important for couples to have a frank conversation about investments, to figure out how you both want to handle things.
You might want to consider investing together to grow your wealth, or to agree that the major assets and the growth of them should remain separate.
If one partner has a lot more savings and investments than the other, keeping things separate might be preferred to “protect” this income.
However, it might make sense from a tax point of view (see below) to transfer assets between you – married couples can do so without any tax implications and make the most of both people’s tax-free allowances.
If one spouse or partner pays tax at a lower rate than the other, you could cut your collective tax bill by switching assets to the lower-earning spouse.
Taking financial advice could be a smart move to make sure you’re maximising tax breaks.
Make the most of tax breaks
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. Should you wish to cash in some investments, for example, and the gain exceeds £3,000, you can save on your tax bill by transferring assets to your other half to utilise their allowance.
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. This means your or your partner’s allowance could double.