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Grandma's got a boyfriend, now what?

The older you are, the more complicated your finances, especially if you're combining households.
/ Source: Forbes

Your spouse has died following a long, loving relationship, and after several years of living alone you've decided to move in with that engaging person who makes you feel alive again.

The companionship is warm and all is well, except for the children.

"The kids may have a conniption over the surviving parent's decision to date," says Sheryl Garrett, a certified financial planner and co-author of Money Without Matrimony: The Unmarried Couple's Guide To Financial Security. "The adult children don't like it — especially when mom is the surviving parent, because they're worried about the inheritance."

First, a word to the kids: Grow up!

Parents have a lifetime of experience and they haven't forgotten you — or the grandchildren. So relax.

In many cases, retired adults have acquired large houses filled with a lifetime of things, and the logistics of moving in together are overwhelming so the lovebirds often maintain separate households. If nothing else, this makes it easier to sort things out after one partner dies.

At this stage in life, estate planning is critical, and a living trust warrants consideration.

A will states what you want done with your assets after death. Your influence ends after the will has been approved by the probate court. Garrett says that a trust holds assets or property for the benefit of others and makes your influence extend beyond the grave.

A trust set up while the person is alive is called a "living trust." A trust created by a will and going into effect after death is called a "testamentary trust." A trust can be irrevocable so the terms can't be changed — or living and revocable so adjustments can be made if circumstances change.

A trust can provide for your children and the future of your grandchildren. It also can include a provision to take care of your unmarried partner if you die or are incapacitated.

Garrett says trusts also keep personal matters confidential. All proceedings in probate court are a matter of public record, and anyone, including a nosy neighbor, can trot down to the courthouse and read every detail of your financial life.

But the most important aspect of a trust may be the peace of mind it gives your children: They know exactly where things stand and that the inheritance won't be squandered.

"Sometimes, adult children get pretty selfish," says Garrett, who wrote Money Without Matrimony with Debra A. Neiman. "A living trust will let the kids know they'll be taken care of and put their fears to rest."

A trust isn't something you can write on the back of an envelope at home. Make a detailed outline of your wishes and consult an attorney.

Garrett says establishing a trust isn't cheap — about $1,500 and up. Like a will, a trust may be updated as circumstances change, and that's an additional expense.

She says that some younger couples fall into the "invincibility syndrome" and see no need to plan for the future because they're healthy and can't imagine becoming sick, let alone dying.

Older couples have heard time whistling in their ears and know better. A health care directive is also part of estate planning and is vital late in life.

Garrett calls a durable power of attorney for health care a key document for anyone, especially an unmarried couple in their later years.

"It's not about death or dying," Garrett says. "It's about taking care of you while you're living but unable to care for or make decisions for yourself."

It's a legally binding document that states that an individual or specific individuals will make health care decisions for you if you can't make them for yourself.

Without such a written statement, your partner can't make decisions for you if you become incapacitated or are seriously injured in an accident — and it makes no difference if you have been together for years. That responsibility falls to your family, even if you're estranged and haven't spoken to them quite some time.

Getting this right requires thought and frank discussion with family members and others involved.

Seniors, especially those who remain single, need to think about long-term care insurance because they won't have a spouse to care for them and may not have a trusted partner.

"Many older people don't want to depend on their children," Garrett says. "And they shouldn't count on Medicaid."