Remarriage
To-do’s

MERGE YOUR FAMILIES AND YOUR FINANCES WITH THESE STRATEGIC TIPS FOR GETTING REMARRIED.

Getting remarried comes with many tasks you probably already completed for your last wedding, including planning the ceremony, considering whether to change your name, moving in together and merging your finances. The difference now is that you and your new spouse probably bring more to the marriage—children, assets, business interests, etc.—than you did last time you walked down the aisle. Mingling finances at a later stage in life, especially if you’re creating a blended family, can be complicated. There’s no one-size-fits-all approach, but there are some things you should take care of before saying “I do.”

The Family Budget

Managing your cash flow and bank accounts in your second marriage may not be as simple as it was during your first. You may have had a joint bank account before and wish to keep some money separate now, or vice versa. The key here is to make sure you’re not repeating any mistakes. Money squabbles are a common cause for divorce, so if your household money management caused problems in your first marriage, do whatever you can to change your process this time around.

Many couples choose to keep some money separate in a second marriage. This may be a good option for you if you came into the relationship with significant assets or business interests, have children from your previous marriage or disliked having a joint account previously. A common solution is to keep a joint account for household expenses and maintain separate accounts for spending money and individual obligations, such as alimony or expenses specific to your children.

Estate Planning

Creating an estate plan is important at the beginning of any marriage, and it is even more so when creating a blended family. First, you’ll want to update your will. Make sure your ex-husband is not listed as a beneficiary and that your will accounts for your current husband, children from your previous marriage and any children you may have with your new husband. Depending on which state you live in, your property might be automatically given to your new spouse if you were to die. If you want to leave assets behind for your children, you have to note that in your estate plan:

  • Life insurance:
    Consider taking out a life insurance policy for each of your children. If you were to die, your husband could inherit your assets and your children would each get an insurance benefit. You can also use life insurance to satisfy any child or spousal support obligations so your new husband won’t have to take care of that.
  • QTIP trust:
    A qualified terminable interest property (QTIP) trust is a useful tool for parents who want to provide for both their new spouse and children from a previous marriage. QTIPs allow you to leave your assets to your surviving spouse but then pass them on to your children when your spouse dies. Your surviving spouse cannot make changes to the trust, so your children are guaranteed to get their inheritance.

Whatever you decide, make sure everyone in your new family is aware of your estate plan so there aren’t any unpleasant surprises in the future. This way, you can explain your reasoning and answer any questions that might arise.

Child Support and Alimony

The amount of child support and alimony that you owe or receive can change when you get remarried. This is also the case for your new husband, if he is paying or receiving support from his ex-wife. In general, you may end up owing more or receiving less when you get remarried, depending on the state you live in and the terms of your divorce decree. Make sure you check into this before tying the knot or even before moving in together.

Paying for College

If you are your child’s custodial parent, you’ll be responsible for filing the FAFSA (Free Application for Federal Student Aid), which determines how much federal aid your child is eligible for when applying to college. Your new husband’s income needs to be included even if he is not planning on contributing to your child’s college expenses. Your ex-spouse does not need to be included. This is also the case when filing the FAFSA for your new husband’s children, assuming he is the custodial parent.

Benefits

One of the first financial tasks you should complete upon remarriage is updating your beneficiary designations on policies including long-term care insurance, annuities, life insurance, etc. Your beneficiary designations will override your will, so double check that the two are in agreement. Make sure your new spouse and children are covered under your employer’s health insurance, if necessary. Double-check your Social Security or veterans’ benefits as well, which are also subject to change after your second wedding.

If you have a qualified retirement plan, such as a 401(k), your retirement benefits automatically go to your spouse in the event of your death. Even if you name your children as beneficiaries, your spouse would have to waive his right in order for them to receive it. You can get around this with a prenuptial agreement.

Prenuptial Agreements

Many couples find prenups uncomfortable and unromantic, but they can be useful tools, especially for second marriages. With a prenup, you can prevent your new spouse from inheriting your share of a business, back up the terms of your will and waive your spouse’s right to assets you choose to pass down to your children. Prenups are also a great way to talk openly about your finances, as they require you to list assets and liabilities from the start and make plans for what should happen in the future. A good prenuptial agreement should protect the interests of both parties. In order to ensure that your interests are protected and that your prenup won’t be thrown out later by a judge, both parties should get their own lawyer and the document should be signed well before the wedding takes place.

Creating a blended family comes with complicated financial tasks, but talking openly about your expectations regarding money and inheritance is a great way to start your new marriage. Careful planning and open communication is the key to merging your finances successfully with a new spouse while protecting yourself and your family.

* Investment Advisory Services are offered through Capitol Private Wealth Group, a registered investment adviser.*