For Richer and for Poorer: Second Marriage Money Issues

Don’t just cross your fingers and hope for the best! Here’s how to enter a second marriage without repeating first-timer money mistakes.

Research tells us that remarriage becomes more likely with age. Later-life remarriages are common, with as many as 67% of previously divorced or widowed individuals aged 55-64 getting married again. A second chance at love is great, but it often comes with unique complexities. One or both spouses may be bringing pre-existing assets, children from earlier marriages, alimony and/or child support, a longer debt and credit history, and much more to the new union.

With money being a major stress point in many relationships, how can you make sure that your second marriage is off to a great financial start?

Communicate, communicate, communicate

At a minimum, begin by having an honest and open conversation with your soon-to-be spouse. Discuss your financial circumstances, including debt, property and business interest ownership, retirement accounts, savings accounts, etc. Talk through your plans for each of those, as well as about your financial goals for yourself, your children, and your new family unit. If money conversations are stressful or difficult for you, consider asking a trusted financial planner or attorney to facilitate.

Review your past obligations

Make a list of your obligations and legal promises that predate the second marriage. In some cases, they may limit your financial options today. For example, if the terms of your previous divorce spell out that your ex-wife will be listed as the sole beneficiary on your retirement account, you may not have the option to make your new spouse a beneficiary on that same account.

Think through your estate plan, will, and trusts

If either (or both) of the soon-to-be spouses have an estate plan, a will, or a trust, now is the time to review them carefully, and to consider how those documents may have to change to reflect your new family situation.

Don’t make the mistake of following a DIY approach on these legal documents! Your good intentions and the desire to save a bit of money may backfire. For example, naming a surviving spouse the sole beneficiary of your combined estate might look fine on paper, and you may assume that the surviving spouse will be fair in naming the children from both prior marriages as the ultimate beneficiaries of the combined estate. However, there is no obligation to do so in the absence of a will. Don’t inadvertently disinherit your children. Think through the names on accounts and property deeds to avoid creating a hardship for your family upon your passing.

Consider a prenuptial agreement

Even without the statistics related to the possibility of divorce in a second (or third) marriage, a prenuptial agreement makes sense in many ways. A prenup is your space to address how the new family would deal with pre-existing assets in the event of a divorce. It should also address pre-existing debt.

Many soon-to-be spouses are initially reluctant to raise the subject of a prenup, concerned about the possibility of a negative outburst and hurt feelings. It’s OK to be apprehensive and nervous before discussing challenging topics – but it doesn’t mean you should skip the conversation. I encourage you to think of a prenup as insurance. No one likes to talk about death yet buying a life insurance policy is a good choice for many. Approach “the prenup talk” with an open mind. Be honest about your fears and concerns, listen, and remember that this is a complex subject that may require several conversations.

Which brings me to the next point.

Give yourself time<h/2>

Be sure to give yourself plenty of time to work through the financial issues prior to the wedding. “Honey, come to think of it, let’s sign a prenup” is not a great conversation starter at the rehearsal dinner! Lay the groundwork over time. Remember that mutual trust in money-related matters comes from the willingness to have hard conversations, vulnerability, and knowledge that one’s openness won’t be exploited.

Navigating second marriage money issues

Talking about money is never easy – especially when money and debt baggage is heavy (as it tends to be later in life). Remember that mutual willingness to be open about your resources, goals, and plans is a key part of forming a trusting marriage. For some couples, having a financial planner or an attorney facilitate the conversation can make a difference. Getting clarity on important financial matters can go a long way towards building a strong foundation for your life together.

Bonus tip: consider exploring your attitudes about money with your soon-to-be-spouse. Do you tend to be the “saver” type, or the one to spend money easily? What’s your past history with budgeting, financial planning, and investing? Explore your individual strengths to build a strong financial team. If your money personalities are widely divergent, consider switching roles for a month to benefit from a different perspective.

mage credit: https://www.citycu.org/articles/for-richer-poorer-or-until-debt-do-us-part