Second (or third) marriages come with a special kind of optimism and the chance for a new “forever after.” But remarrying also tends to come with more financial complexities—particularly if you already have children. That’s why it’s important to take some time as you begin this new journey to put a plan in place to ensure your wishes for your family are carried out.
“Navigating the financial side of remarriage requires thoughtful dialogue, coming up with and implementing a plan, and leaving yourself plenty of time before the wedding to work out the details,” says Bridget Wall, advanced planning attorney at Northwestern Mutual. “These conversations will serve as the foundation for your financial planning decisions as you start this new chapter.”
Here’s a second marriage financial planning checklist to help you as you begin your new life together.
1. Be transparent
A healthy relationship is based on open and honest communication, including full disclosure about where you each stand financially. To get off on the right foot and avoid surprises down the road, share all the details, like your assets, debt, credit history, and any financial support you may be required to provide or that you receive as a result of a prior divorce decree. “Only until after this information is shared can you start to make important financial decisions that can have a long-lasting impact,” Wall says.
2. Decide whether it’s yours, mine or ours
A big part of merging your life with your partner’s involves deciding how to (or how not to) merge your finances. Wall says that most people do not enter their second or third marriage as financial equals, which is more regularly the case in a first marriage. Therefore, decisions need to be made about the co-mingling of assets and division of expenses.
Some couples may find that it makes sense to set up an account for joint expenses and keep their other assets separate. Others combine all their cash, debts and expenses. Still others might choose not to have any shared accounts, and simply split up who pays which bill. Whatever you choose, agree on specific ground rules for spending and saving.
3. Be clear about family obligations
For instance, if you plan to fund your children’s education or help support aging parents, discuss the costs and timelines for each. So if you plan to help a child pay for college or assist your parents with the bills for their long-term care, you will need to work out the details as these are big budget items and may change how you decide to account for or divvy up expenses.
4. Rethink your estate plan
Estate planning is critical when it comes to legacy planning, especially if you or your spouse are bringing children or significant assets to the marriage. Blended families often require additional estate planning because probate laws aren’t generally written with blended families in mind. Without a valid estate plan in writing, your assets might not be divided up in the way that you intended.
Estate planning includes revising existing documents, such as a will, to include your new spouse or stepchildren, updating titles and deeds, and updating your beneficiaries on any life insurance or investment accounts. Keep in mind that a prenuptial agreement (see below) also ties into an estate plan because it deals with money or assets after the death of either spouse.
5. Consider a prenuptial agreement
You may want to consider a prenuptial (prenup) agreement, which is a standard legal agreement prior to remarriage. A prenup is a must for protecting assets, business interests, inheritances, and even debt in the case of divorce, and may offer creditor protection.
While no one anticipates divorce when entering a marriage, it’s certainly a possibility. Think of a prenup as insurance of the possibility that something unexpected may happen down the road.
6. Update accounts
When you get remarried, you need to notify the applicable agencies, such as the Social Security Administration and any financial institutions, of any name changes. Update car titles, mortgages and any financial accounts that you plan to hold jointly. You may also need to change the beneficiary information on your retirement, investment and insurance accounts to make sure your loved ones receive the correct assets per your wishes.
“Although beneficiary designations are not stand-alone estate plans, they are a critical part of your overall planning process,” Hall says. “If your beneficiary designation is different from your trust or will, the beneficiary designation will override the directions of your estate planning document. Forgetting to update beneficiary designations creates a risk of leaving an asset to an unintended beneficiary like a former spouse.”
7. Dream together
Chances are, you each have retirement savings that were built around goals you set with your previous spouse. This is your chance to set new goals for your new life together and figure out how you will achieve them. While these conversations may seem daunting, you can rest assured that you do not need to navigate these steps alone. A financial planner or professional can help review what you have and help you figure out a plan to reach your new short- and long-term goals.