Second Marriages and Money

Getting married for the second, or third, time, is a little more complicated than first-time marriages. There are usually children to consider, and assets, like a home and retirement savings.

By the time you’re ready to walk down the aisle a second time, you know a bit more than you did in the first go-round. You know money matters, children from both spouses will play a role in the success or failure of your marriage and that you’ve likely got to take some steps to protect yourself, your children and your money, just in case things don’t end happily ever after.

Barron’s recent article, “How to Manage Your Money When You’re Remarrying,” says the subject of money should be easier this time around. Money talk might have been taboo going into your first marriage, but experience—and the battle wounds of divorce—tend to make this dialog much easier.

The best strategy for navigating the financial side of remarriage is to be direct and give yourself plenty of time before the wedding to work out the details. All good financial plans start with a broader discussion that has more to do with identifying and setting goals, than it does about dollar signs.

Consider what you hope to achieve individually and as a couple over the next year, five years, decade, and so on. Discuss your priorities and intentions, be specific, and write it all down. Your conversation will be the groundwork for the specific financial planning decisions the two of you will need to make, when it’s time to formalize your plans for merging finances or—as the case may be—keeping them separate.

Prenuptial agreements, or “prenups,” are becoming more frequently used by millennials because they are marrying later and bringing more assets and debt to the marriage. In the case of remarriage, a prenup should be strongly considered by most couples. This legally-binding agreement details how assets and liabilities will be divided, in the event of divorce.

Many experts suggest keeping separate checking, savings, and investment accounts—but setting up joint accounts for shared lifestyle expenses. Having a joint account removes the need for constant discussion about how you’ll divide expenses. Create a monthly joint budget and agree on the fairest way to split it. Some couples divide it down the middle, while others base it on a percentage of their respective incomes.

You don’t need to have all of your estate plans settled before the wedding but be certain to update key documents where appropriate—such as your wills, medical advance directives, retirement plan and insurance beneficiaries.

How assets will be divided at the death of each spouse, is a hot spot for many couples. An estate plan, in addition to a prenup, can state your wishes clearly. You’ll need a plan to ensure that you don’t disinherit children from a first marriage. As grim as this sounds, one of you will die first, and you may need your estate plan to incorporate trusts so that children from both spouses and the surviving spouse are treated fairly. The last thing you want is for your spouse to lose the blended family you’ve created, because of fights over money.

Reference: Barron’s (March 2, 2019) “How to Manage Your Money When You’re Remarrying”