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:
¨ Consider 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.
¨ Develop a 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.
¨ Separate 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.
¨ Treat 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 practices.
¨ Consider 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 FloridaSo You Want to Remarry? has additional information about financial issues related to remarriage.