I thought this would be a good place to ask for advice.
A longtime friend is getting married at the end of the year. It's complicated, because it's her first marriage, and his third. (!!!) She's 48, he's 55.
She's a very successful engineer, and he's also successful in his career as a hospital administrator. They've been together for ~ 5 years, and weathered Covid together, which says something, I think.
She had owned her own house in the Bay Area; she sold it a couple of years ago, and they purchased two houses together - one in AZ, and another in the Bay Area. He inherited a third house, from a parent, in CO. He'd like to keep the last one for his adult kid.
She is working for a public agency, and has accrued 25 years of service thus far. However, she is not yet 50, so she cannot retire yet. So she came over on Friday night for dinner and spreadsheets. We perused her pension plan docs, and talked through possible strategies.
I was also able to successfully broach the subject of a prenup, and she said that they had already briefly touched on it, since he had a kid to whom he wanted to pass along the family house.
I also asked how she'd determine her state of residency, since she owns property in three states - I assume that she doesn't want it in CA, but I don't think she can avoid CA taxes, since her agency is a state agency.
The fiance is currently working abroad, and she'd like to join him after the wedding. It's unlikely that she'll be able to work remotely, so that probably means quitting. Given her years of service, she's in a good spot. The question is - when to claim the pension.
I looked at the multipliers for her tier, and it goes from 1% of highest annual salary x years of service (at age 50) to 2.1% of her highest annual salary x years of service (at age 60). So clearly, quitting to find another (remote) job, and delaying a claim on the pension until age 60 is the smart choice.
She will have a pension, the fiance has a pension, they have rental income from two houses (one not yet cash-flowing positively), plus two Social Security incomes. So clearly they'll be fine. The execution and setting up of assets seems prudent, given this is his third marriage.
She says she doesn't want to sell the CA house, as she thinks she'd never be able to buy in again if she lets it go. She also expressed interest in taking the cash from her sold home, investing it in the negative cash flow property, and recasting the mortgage (currently at ~ 6%). I cautioned her from doing that, as it would co-mingle a pre-marital asset into a marital asset.
My thoughts:
1) Rather than co-owning two houses (and holding his inherited house separately), they should choose the house they prefer (he likes AZ and she likes CA). They should quitclaim to one another prior to the wedding, so that he has his inherited home for his son, plus the AZ house as a single man. She keeps the CA house as a single woman. Once that's clean, she can pay against the CA house's mortgage, and recast at that time, keeping her pre-marital cash separate. This is helpful (primarily) to her.
2) They should get a prenup, declaring their intent on the separate RE, which protects his inherited home for his son, which has got to be helpful. There's no way she wouldn't assist in roof replacement or other capital project, so having the title clean would be helpful (primarily) to him.
3) Since she has accrued ALL of her pension service credit as a single woman, the prenup should include the statement that her pension is her pre-marital benefit, and if they split after she claims the pension, she retains all pension benefits.
4) Since he accrued ALL of his pension service as a single man, they'd make clear that his pension is his, should they split.
What else should she include?
I would append copies of statements on the shares she has in her retirement and savings accounts, and details on his savings and retirement accounts, too.
I assume they should both start new retirement and savings accounts, with the marriage, so any prior accounts are easily accounted for should they split.
Any other advice?
