Today I am going to start a two part discussion about remarrying. Many advisers like to talk about divorce and how to get through the divorce. I would like to take it a step further to when you decide to remarry. In fact, statistics from a 2012 book, The Marriage Blueprint, suggest that nearly 40 percent of new marriages include at least one previously married spouse. Remarrying later in life can produce a number of complex financial, legal, and emotional matters that should be addressed as soon as possible. If you or someone you love is part of a blended family, I urge you to think about these important issues. This is something that will spark conversations even if you’ve already tied the knot!
In Part I, I am going to talk about two of the 5 Critical Financial Issues in Remarriages. The first is “Having a candid conversation with your significant other” and the second is “Updating the important documents.”
Be candid about your financial situation. Frequently, couples who are remarrying have significant financial baggage. Being open and honest with each other about assets, debts, and obligations from a previous marriage can help avoid problems later on. Having these conversations upfront can also help you decide whether or not to combine finances and how to do that. Many couples in their second marriage my not be combining finances. Regardless of this, if you plan on retiring together, you should be open about what each other has in assets as well as obligations.
Consider the following questions:
• What financial obligations are you bringing to the marriage?
• How will you split living expenses and contribute to savings?
• Do you plan to pool your finances?
• Where will you live and who will own the house?
• Who is on the mortgage?
• How will your marriage affect college financial aid for your children?
• What will you do if you need to financially support an adult child or elderly parent?
It’s very important to be able to have these conversations early and often in your marriage. If you find that you’re not on the same page or are worried about bringing up complicated issues, ask your financial representative to help mediate your discussion and provide a neutral perspective. There are even great tools that advisors have to open this conversation up and make it an easier one to have. One tool I like to use is our Financial Compatibility Questionnaire. This is one of the best tools that I have found to really open that discussion and make sure everyone is on the same page. You can find the link here:
Update life insurance, medical directives, and beneficiary designations. It’s unbelievably common for couples to forget to update important documents when they remarry. If you or your spouse dies without changing beneficiaries on a retirement account or life insurance policy, a significant part of the estate could go directly to a previous spouse, with no legal recourse. If you and your spouse have a trust, living wills, healthcare powers of attorney, or medical directives (and you should), review them with your attorney to make sure that these documents reflect your current wishes. If you don’t currently have an attorney, I can introduce you to one from my professional network. One of the biggest issues I see all the time, and it’s happening more and more, where one person had a living trust going into the marriage that has not been re-done since being married. This may cause assets to pass in a way that the couple would not ultimately want. Be sure that your legal documents reflect where you currently are in your life.
Footnotes, disclosures, and sources:
These are the views of Windus Fernandez Brinkkord and Michael Gilbert and not necessarily those of National Planning Corporation or Trilogy Financial Services and should not be construed as investment advice. Neither National Planning Corporation, Trilogy Financial Services, Windus Fernandez Brinkkord nor Michael Gilbert gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.
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About Your Columnist
Windus Fernandez Brinkkord is a featured columnist for Women Taking Charge, the official blog of Connected Women of Influence, where she covers the intersection of women in business and managing their investments and taking charge of their financial future. Currently, Windus is Senior Vice President of Investments with Trilogy Financial Services, a financial services company that focuses on helping business owners and individuals build and manage wealth.