Remarrying? These needs to be your key monetary concerns
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Remarriage can come with a new sense of joy – as well as financial baggage that wasn’t there the first time.
Regardless of whether your previous relationship ended in divorce or your spouse’s death, there is a good chance that you or your new partner – if not both – will enter your next marriage with a range of assets, debts, and other financial obligations, not to mention including children who need support now or in the future.
Hence, it is important to determine how you and your new partner will deal with the various aspects of your financial life, experts say. And that goes far beyond the decision of whether separate checking accounts should be kept or who pays which bills.
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“You should start the financial conversation as early as possible in the relationship,” said Jim Graham, certified financial planner, investment advisor at Orange Rock Wealth Management in Peoria, Arizona.
“But even if you’re already engaged or married, it’s never too late to have a conversation,” said Graham.
Please note the following.
Assess the risks
It’s not exactly romantic, but you should find out if your new partner is a financial risk – which is quite common, Graham said.
For example, a spouse might have a gambling addiction, drug addiction, or be frequently involved with the IRS on tax filings, he said. Or maybe the person owns or wants to start a business and wants the new spouse to help with funding. And debt – whether from credit cards, student loans, or other commitments – can also tarnish a marriage if there is no plan to address it.
“The new spouse may have little financial risk and that is great, but it can also be a significant amount,” said Graham. “It can lead to you planning something that you wouldn’t otherwise have to do.”
Consider a legal agreement
If you haven’t made your marriage vows yet, it’s worth considering a prenup (or prenup, as it’s called).
“If you are getting married for the first time, you probably less want to get married,” said Graham. “The second time, it’s more likely you have it.
“It’s easier to have this conversation when you’ve been married.”
While marriage usually involves determining in advance who will get what in the event of a divorce, the agreement can also determine how the finances will be handled during the marriage. This can range from determining whether your spouse’s income will be pooled for household bills to ensuring that a future inheritance is entirely yours (or your children), regardless of what happens to your relationship.
If you are already remarried, you can consider a “post-marriage,” which is generally the same idea as getting married, but performed during the marriage, not before.
In either case, “it is important to have some clarification of the financial situation and obligations of each spouse,” said CFP Avani Ramnani, director of financial planning and asset management at Francis Financial in New York.
Update your will and your beneficiaries
If you want your wealth to get where you want it, it’s important to update your wills as well as the beneficiaries on retirement accounts, life insurance and the like. Note that these designations of beneficiaries replace any intentions stated in your will.
And if you want your children from a previous marriage to take ownership of a particular asset in place of your new spouse when you die, it may require some additional planning.
“We see this all the time,” said Graham. “If you don’t plan properly, you could die and have a spouse who doesn’t share with children, or vice versa.”
For example, 401 (k) plans require your current spouse to be the beneficiary unless the person legally agrees otherwise.
That means if, for example, your new husband is your listed beneficiary and you passed away before him, those 401 (k) assets can be used as you see fit, which may not include giving money to your children. The same goes for other accounts where the spouse is the beneficiary, and usually those where you and your spouse are co-owners.
Be aware that if you die without a will, the courts in your state will decide who gets what. This process is public and often chaotic when potential heirs have competing priorities and conflicting ideas about what is rightfully theirs.
bits and pieces
If you remarry at a later age, consider how to deal with the cost of long-term care – which generally means getting help with the activities of daily living – if you or your spouse may need it later.
“If you remarry in your 30s, that’s not the most important thing, but if you are 60 or older this is what you should check out,” said Graham of Orange Rock Wealth Management.
Additionally, you and your new spouse should identify your common goals and visions for the future.
“Especially when you’re in your 40s or 50s, you have a lot fewer years to work and save,” said Francis Financial’s Ramnani. “So think about what your new future looks like and how the two of you are planning your goals.”