The purpose of Money Talk is to improve readers' financial capability with research-based personal finance information.
Wednesday, November 7, 2018
Financial Planning for Remarriages
Not only do they merge their
financial lives, as all married couples do, but remarried couples also bring
with them financial “issues” from their previous marriage(s) such as unpaid
debts and payments to, or income from, an ex-spouse for alimony and/or child
support obligations. Estate planning is also complicated by remarriage (e.g.,
providing for both a new spouse and children from a prior marriage). Below are
six financial planning tips for people who are remarrying:
a Prenuptial Agreement (a.k.a., prenup)- Interview at least three family
law attorneys to prepare a plan. Define assets that each partner brings to the
marriage, how they will be titled, how expenses and existing debts will be
repaid, and how property will be distributed in the event of death or divorce.
Spending Plan (a.k.a., budget)- Include anticipated income and expenses and
decide who will pay what bills. It is generally fairer to all involved to pay
current expenses (not those related to a prior marriage) in proportion to each
partner’s contribution to total household income.
the Past From the Present- Accept the fact that support payments to an
ex-spouse are an ongoing “fixed expense.” Remarried couples may prefer paying
support obligations and other expenses for children with their personal funds
so they are not constantly “visible” to their new spouse.
Children Fairly- Develop uniform policies for all children living at home
regarding allowances, spending money, payment for services, and equipment
purchases (e.g., cell phone). Otherwise, children and stepchildren, alike, are
likely to cry “unfair” about differences in the parents’ money management
a QTIP trust- Create this legal document to leave income to a spouse for
life but distribute assets to children from a prior marriage.
Communication about financial
matters is important in all marriages but especially in remarriages which come
with more complications and where spouses may have developed long-standing
money management practices. The University of Florida publicationSo You Want to Remarry? has additional
information about financial issues related to remarriage.