Address Financial Planning For Remarriage Issues Early

Financial planning for remarriage can be typically thornier and more complex than it was the first time around.

Both parties may bring children—minors or adults— to the second marriage, have far more in accumulated assets or debts.

The financial planning for remarriage can also involve entrenched personal money styles. Meaning couples may be carrying emotional detritus from financial conflicts in their previous marriages.

These tips will help you and your clients meet the challenge of melding two more mature sets of finances and establish a firm financial foundation for their new union.

Talk it over

In financial planning for remarriage it's always ideal to lay out the finances for everyone to see. Review the assets each party will bring to the marriage, and discuss what each spouse might want to keep separate.

Who will pay what portion of daily living expenses or big-ticket items? This can be a sticky issue if one partner has significantly more income or assets than the other.

Do one or both partners bring financial obligations from a previous marriage?

Doing financial planning for remarriage will reveal if they are committed to putting a child through college—and do they look to their new partner to help pay for school?

What impact might remarriage have on financial aid for a child in college? Does either have child-support obligations? Will minor children be living with them? Is either helping an adult child with their finances?

Have as a couple written everything out to minimize later questions or disputes?

Where will you live?

Remarriages often involve two homes. Will you sell one dwelling and move into the other, or will you sell both and buy a third residence to make a fresh start together? Either way, what if you each have children from a previous marriage? Who will inherit your mutual home if one of you pass away?

Update wills and beneficiary designations

It's amazing how often remarried couples forget to update wills and beneficiary designations for such financial instruments as individual retirement accounts, pension accounts, and life insurance policies. If someone dies and it's the ex-spouse that is still listed as beneficiary on the accounts, the ex-spouse inherits, not the current spouse.

Review retirement benefits

Beyond updating retirement account beneficiaries, there may be other retirement issues to consider. For example, your ex-spouse might be entitled from the divorce decree to a portion of the retirement benefits, which would reduce resources you as a new couple's retirement.

Review insurance

The newlyweds may need additional life insurance as current income protection, or perhaps to compensate children from a previous marriage because they have sold the childhood home that the children otherwise would have inherited. Health care, auto, disability, and other insurance policies may also need adjusting.

Consider trusts

Trusts can be especially useful in remarriages for directing assets to the proper heirs while still supporting a new spouse.

For example, you bring to the remarriage a home or stocks that may eventually you want to go to your children from the first marriage.

Consider a prenuptial agreement

A prenuptial agreement is often essential in remarriages. It's particularly important when one or both parties bring substantial assets or debts to the marriage, or when one or both expect to inherit substantial assets.

For example, you are a business owner who may want to pass the business to your children, not to the spouse.

Prenups are strong documents as long as they are drawn up with separate attorneys well in advance of the union—no springing the prenup the night before the wedding—and they provide full disclosure of everyone's finances.

The eve of remarriage is a time to review financial planning for remarriage aspects of your finances. Cover the above areas, and also consider starting or revamping a spending plan as a new couple, readjust your investment portfolios, and reviewing changes to your employee benefits.