Dear Pay Dirt,
I have a loving, adoring husband who is 12 years older than me. I make around $100,000 a year and he makes five to six times that amount depending on how his bonuses go. He has recently started more aggressively saving for retirement with the goal in mind to have us both retire at the same time in 15 years (him at age 60 and me at age 48). He has worked hard and supports almost all of our daily household expenses—I am aligned with him in this ambitious goal.
However, in all of my husband’s calculations, he bases our retirement needs on his lifespan and refuses to acknowledge that statistically I am likely to outlive him by 20 years and will require funds to support myself in that additional stretch of retirement. Frustrating, but I believe I have a tidy solution! I am the sole beneficiary of a trust, from which I took a $1 million dollar distribution to buy us our marital home because even though he makes a lot, he had very little saved at the time. We agreed that the rest of my trust would be used to pay for our children’s college expenses and retirement.
When he asked about the present value of the trust in order to use that in calculating what we have saved currently for our retirement, I told him there was $1 million left when in fact, there is $2 million. The trust will be dissolved next year and all remaining funds distributed to me. Can I split the value into two accounts and put $1 million toward our joint retirement and save $1 million in an account in my name only for my personal retirement funds to be used once I am likely widowed at some point? Does he need to know? My plan would be to make our two children the beneficiaries of this private account so as to supersede my will that states that everything goes to my husband upon my death in the unlikely event that I pass before him to keep it away from a possible gold-digging, second wife. If it matters, we have a prenup that specifically states that funds from the trust are not considered marital property. I admire his “what’s mine is ours” attitude but if he’s not willing to accept that I will likely have a life after him, then I have to look out for myself! Are there any other considerations I should make?
—Some of What’s Mine Is Ours
Dear What’s Mine,
While I admire the desire to write into this advice column, someone with a $700,000 joint household income and a $3 million trust should be talking to an estate lawyer. I know searching for a qualified professional for your complicated legal question can seem intimidating. But you presumably know the phone number of an estate lawyer because you inherited a multi-million dollar trust. I am a licensed investment advisor, but I am not your investment advisor.
At the core of your question is a fear shared by many women: They won’t be taken care of in their old age if their husband predeceases them. Once wealthy widows living in reduced circumstances is a recurring theme in many of Jane Austen’s works because women’s inheritances (their “fortunes”) became their husband’s property when they were married. Husbands were expected to invest their wife’s dowry in the “fours and fives” and take only its 4 percent to 5 percent annual interest for household income. If the wife were widowed, her dowry would become her property again but her husband’s other assets would go to his male heirs. Unfortunately, many rich husbands made poor investments, gambled away their wife’s dowry, or died without updating their will to grant their surviving wife a life interest in their property.
Luckily, women now have property rights in their marriages. Because you came into the marriage with substantial assets and a prenuptial agreement to protect them, have equal rights to the marital property, and earn your own six-figure salary, you have more opportunities than Mrs. Dashwood did in Sense and Sensibility. You should use that opportunity and privilege to find an estate lawyer you trust and talk through the options. A trust division depends on several factors, such as the type of trust (revocable, complex, irrevocable), your state, and your prenup.
Should you continue to lie to your husband about how much is in your trust? Probably not. Hiding $1 million worth of assets may be a trust violation, affects financial planning and taxes, and could harm you in a divorce, which your estate lawyer will tell you. It would be a good subplot in Gossip Girl or Succession, though. But let’s keep the hiding of major assets from a spouse relegated to television dramas.
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