Whether for love, companionship or financial security, the benefits to remarrying are many.

Most remarried individuals in their 40s, 50s and 60s say the second time around they sought out spouses with whom they had more in common, or someone who "shares their values," according to a 2004 study of 1,000 recently divorced individuals by AARP.

But as many may discover, remarrying later in life can lead to unintended financial consequences for the spouses, and disappointment and acrimony among the children.

Parents need to acknowledge that adult children tend to be myopic, and typically look at remarriage in terms of "what does it mean for me," says Margorie Engel, president of the Stepfamily Association of America, a research-based organization in Boston. "Children generally feel that estate planning should be based on the blood line and not the wedding band," she says. "Instead of not talking about the elephant in the room, you should discuss these things so everyone is clear on your intentions."

Ms. Engel says family conflicts are becoming increasingly common as seniors who are widowed or divorced meet new loves and marry in retirement. Financial advisers and lawyers don't always follow through on "the right questions to ask so that stepfamily financial documents are properly drafted to actually carry out the remarried couple's intent," she says.

In practice, the secret to a conflict-free melding of a couple's finances when they are in or near retirement may be planning, paperwork and a lot of dinner-table conversations. In the second part of a two-part series on divorce and remarriage over the age of 50, Fiscally Fit examines some questions couples need to ask themselves, and discuss with their children.

Yours, mine or ours? To be sure, there are many advantages to remarrying in your retirement years. In addition to caring and companionship, couples can reap many estate-planning advantages as some assets can be transferred to a spouse tax-free. For example, if you live in a community property state, spouses generally can't segregate income and assets. But since state laws vary, couples with significant assets should be upfront about how they plan on managing finances before marrying.

Remarriage and Social Security

The timing of your marriage may have a substantial impact on your Social Security income when you remarry later in life. If you remarry before age 60, you won't be entitled to any "widow's or widower's benefits" under Social Security. But remarriage after age 60 (or age 50 if disabled) won't prevent you from getting benefit payments based on your former spouse's work. And at age 62 or older, you may get benefits based on your new spouse's work, if those benefits would be higher, according to the Social Security Administration.

For example, widow's benefits are 100% of your deceased husband's benefit if you begin taking them when you reach full retirement age. Take them earlier, and you'll get a smaller percentage. But check your new spouse's benefits first: You may want to apply for wife's benefits instead of widow's benefits if your new spouse is entitled to greater benefits than your former spouse -- full wife's benefits are 50% of the amount your husband is entitled to at retirement age. You can't take both.

Prenuptial agreements and estate planning generally are a good idea for couples considering remarrying, but they are absolutely essential for older couples who have significant assets at stake, says Elena Langan, a Miami-based family lawyer. She also encourages her clients to sign a cohabitation agreements, in addition to a prenup.

"With a cohabitation agreement, couples define what their assets and obligations are, for example, who is responsible for what monthly bills, who pays for expensive vacations or a new car, which house will we live in etc.," she says. Click here to see a sample of a cohabitation agreement from FindLaw.

The first step is to determine how assets will shared within the relationship. One study of 430 remarried couples conducted by Ms. Engel found that in the first five years of a remarriage, most assets are in three pools: one with the wife's holdings, one with the husband's holdings and one combined account to pay for mutual expenses, such as vacations. And that's often ideal, because separating assets in this manner can make estate-planning much less complicated, depending on the state in which you live. But after the five-year mark, "the lines between 'mine' and 'ours' began to blur," she says, and by the 10-year mark a significant portion of the estate had moved into the "ours" category.

It comes down to trust. "Most people who remarry are coming out of a divorce, so if one spouse got burned the first time around it's going to take time to overcome the fear that they're going to get burned again," she says.

To further seal the deal, Ms. Langan, a family lawyer, says she sometimes suggests that couples videotape prenup and cohabitation agreement signing ceremonies. Because remarriages late in life can spur suspicions of gold-digging among biological children, videotaped agreements let adult children from the first marriages see the couple is happy and not under duress at the signing, Ms. Engel says.

What about the children? And speaking of children, when younger parents remarry the focus is commonly on the need to financially provide for school-aged children going forward. But the children of couples who remarry later in life often are adults with children of their own.

"With a younger couple, there's usually a lot of time to build relationships between the children from the first marriage and the new spouse," says Ms. Engel. "With the marriage that comes later there's often little time to build those relationships before one of the spouse's die."

When a remarriage is contentious, it's also important to sweat the small stuff in order to avoid hurt feelings. For example, children from a first marriage may feel a sense of ownership of valuables such as jewelry, antiques or family heirlooms that can easily be overlooked in estate planning.

To avoid hurt feelings, consider taking the time to inventory your valuables, note how you'd like them to be distributed after your death and include a copy of the inventory in your will.

That said, it's your money. Deciding how you want your assets to be distributed when you die is a very personal decision, but not one that needs to be made in conjunction with your children. Making your decisions clear and in writing, and then discussing those decisions with your child while you're alive is a labor of love on behalf of your surviving spouse.

Whose home is it anyway? A source of contention often occurs between adult children and new spouses when individuals remarry, move in together in one spouse's home and the homeowner spouse dies soon after. Wealthier homeowners in this situation typically set up a QTIP (Qualified Terminable Interest in Property) marital trust, which provides the new spouse with income and shelter after the homeowner dies, while ensuring the homeowner's biological kids don't lose their share of the estate.

But Ms. Engel warns that both spouses need to be aware of the terms of the QTIP before signing off on it. Depending on how the trust is structured, a surviving spouse may face severe restrictions on how the trust money is managed and what the income from the trust can be spent on.

For example, she says, if a surviving spouse becomes very ill and now needs to use some of the principal of the trust money she's been left in the QTIP, she may need to justify her request to the kids. "If there's bad blood between them, a child beneficiary of the trust may say, 'I don't think she needs to spend money on that type of care.'"

But QTIP trusts also can lead to family squabbles. Your spouse may have provided for a place for you to live out the remainder of your days, but what about the antiques, fine furnishings and artwork in your home? "After the kids have cleaned out the home, a surviving spouse could be left with little more than four walls and a roof over their heads," she says. For advice on using trusts to pass assets from a spouse to your children without inciting future conflicts, click here.

Prepare for more "in sickness" than "in health"? Death and dying rank right up there with money on the list of taboo family subjects. But it's essential for couples, and their children, to discuss health care before they marry because older couples face a far greater likelihood of becoming disabled or suffering a long-term illness than younger marrieds do. About 42% of people aged 65 or older reported some type of long-term disability, as opposed to just 18.9% of those aged 16 thru 64, according to the 2000 U.S. Census.

Discuss your desires with your spouse, and then craft a living will and designate a health-care agent -- the person you'd like to make medical decisions for you when you can't.

A living will, also called a health-care declaration or medical directive, is a document that states the type of care and degree of medical intervention you would want in the event of a life-threatening medical condition, including direction regarding the use of life-prolonging procedures, according to FindLaw. Depending on your state's laws, you should also obtain a durable power of attorney for health care. This article can guide you through the process of getting your wishes down on paper, and find out more about how to craft a living will and name a health-care agent here.

Having your paperwork in order is necessary because it may not necessarily be the new spouse who will be the primary provider of care when an elderly parent suffers a long-term illness or disability, says Violet Woodhouse, an attorney and author of "Divorce and Money." It may be the kids. Before a health crisis arises, "families need to come together to discuss who's going to take care of Pop in case he becomes sick or incapacitated," she says. "Will it be the new spouse, or 'the family'?"

Ms. Woodhouse recalls an elderly client who recently married his high-school sweetheart soon after his wife of 50 years died following a long illness. Because neither wanted to put the other through the agony of a long-term illness, the widower and his new bride specified in their prenuptial agreement that should either one become seriously ill, they would get divorced. "They wanted to spend whatever time they had left together, but didn't want to burden each other with the responsibility of long-term care," she says.

Some adult children fight to retain control over a parent's health care decisions -- particularly if the relationship between the children and the new spouse is hostile.

These are just a few of many financial aspects of managing money when remarrying later in life. That's why it's a good idea for older couples to revisit estate planning every three to five years to ensure that your estate-planning documents and health-care proxies are keeping up with the changing dynamics of your relationship and your finances.

* * *

Write to me at fiscallyfit@wsj.com.

About Terri Cullen

Terri writes the "Fiscally Fit" column every Thursday for the Wall Street Journal Online, in addition to Ages & Stages and other weekly personal-finance articles and features.


Send your comments about "Fiscally Fit" to Terri at fiscallyfit@wsj.com.