Wedding Finance

Remarry ? These should be your main financial considerations

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Remarriage can come with a renewed sense of joy, as well as a financial baggage that was not there the first time.

Whether your previous relationship ended due to divorce or the death of your spouse, there’s a good chance that you or your new partner – if not both of you – will start your next marriage with a range of assets, debts and debts. other financial obligations, not to mention children who may need support now or later.

It is therefore important to determine how you and your new partner will handle various aspects of your financial life, according to experts. And it goes far beyond deciding whether to keep separate checking accounts or who pays what bills.

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“You should have a conversation about finances as early as possible in the relationship,” said Jim Graham, Certified Financial Planner, representing investment advisors at Orange Rock Wealth Management in Peoria, Arizona.

“But even if you’re already engaged or married, it’s never too late to have the conversation,” Graham said.

Here’s what to consider.

Assess the risk

It’s not exactly romantic, but you should consider whether your new partner poses a financial risk – which is quite common, Graham said.

For example, a spouse may have a gambling or drug addiction or have frequent run-ins with the IRS over tax returns, he said. Or, maybe the person owns or wants to start a business and wants the new spouse to help fund it. And debt, whether it’s credit cards, student loans, or other obligations, can also cast a cloud over a marriage if there are no plans to deal with it.

“There may be little financial risk with the new spouse, and that’s fine, but there can also be a significant amount,” Graham said. “It may cause you to do some planning that you wouldn’t have to do otherwise.”

Consider a legal agreement

If you haven’t yet taken your wedding vows, it’s worth considering a prenuptial agreement (or prenup, as it’s called).

“The first time you get married, you’re less likely to want to use a marriage contract,” Graham said. “The second time around, you’re more likely to have it.

“It’s easier to have this conversation when you’ve been in a marriage.”

While a marriage contract is primarily associated with determining in advance who would get what in the event of a divorce, the agreement may also spell out how finances will be handled during the marriage. This can range from determining whether your income and that of your spouse will be confused for household bills to ensuring that a future inheritance remains uniquely yours (or that of your children), no matter what happens to your relationship.

If you are already remarried, you may want to consider a “postnup,” which is generally the same idea as a prenup, but which is performed during the marriage rather than before.

Either way, “it’s important to have some sort of clarification on each spouse’s financial situation and obligations,” said CFP Avani Ramnani, director of financial planning and wealth management at Francis Financial. At New York.

Update your will and beneficiaries

If you want your assets to end up where you want them to go, it’s important to update your will, as well as the beneficiaries on retirement accounts, life insurance policies, etc. Please be aware that these beneficiary designations supersede any intention stated in your will.

And if you want your children from a previous marriage to become owners of a particular property upon your death instead of your new spouse, that may require additional planning.

“We see this all the time,” Graham said. “If you don’t plan properly, you could die and have a spouse who doesn’t share with the children or vice versa.”

For example, 401 (k) plans require your current spouse to be the beneficiary, unless the person legally agrees otherwise.

This means, for example, that if your new husband is your listed beneficiary and you predecease him, those 401 (k) assets belong to him as he wishes, which may not include passing money on to your children. . The same goes for other accounts where the spouse is the beneficiary and, typically, those in which you and your spouse are joint owners.

Be aware that if you die without a will – called intestate death – the courts in your state will decide who gets what. This process is public and often messy if potential heirs have competing priorities and conflicting notions of what is rightfully theirs.

Tips

If you remarry later on, you might want to think about how you would manage the cost of long-term care – which usually means getting help with activities of daily living – if you or your partner is. need later.

“If you remarry in your 30s, that’s not the most important thing to sort out, but if you’re 60 or older it’s something that should be looked at,” Graham said at Orange Rock Wealth Management. .

Additionally, you and your new spouse need to identify your common goals and vision for the future.

“Especially if you are in your 40s or 50s, you will have a lot less years to work and be able to save,” said Ramnani of Francis Financial. “So think about what your new future looks like and how the two of you are going to plan for your goals. “

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