When it comes to addressing financial issues in a remarriage, couples should look at the past. This should include the way in which each person handled finances, and their pre-marital liabilities and assets, along with the present (e.g., new benefit options) and the future. This means how they’ll handle finances as a unit or protect themselves and loved ones in case of death or divorce.
CNBC’s article entitled “Remarrying? Here are financial considerations to keep in mind before saying ‘I do’” says that it’s important to release any financial skeletons from the closet. Here are some smart financial moves for the newly engaged or married:
Evaluate Your Financial Situation
After the prospective spouses identify their individual and collective financial situation, there are a few topics to consider. Discuss how much risk you can tolerate in your investments? What are your hopes for retirement? Do you have adult children or other family members who look to you for financial support? Your new combined income may also result in a higher tax bill. This is sometimes called a “marriage penalty.” Work with a Financial Professional who has a fiduciary duty to pursue your best interest.
Protecting Pre-Marital Assets
It’s also smart to consider protecting pre-marital assets that were in your name only. You should consult an experienced estate planning attorney prior to marriage. They may advise against commingling some or all assets, and suggest a trust, segregating pre-marital assets from marital assets, to protect you in the event of divorce. You will also want to review your beneficiary designations to ensure they align with your overall estate plan. You may want to name your new spouse as your beneficiary, or you may want to reserve these assets for your children or other loved ones.
Impact on Benefits
Before you remarry, it’s wise to look at how marriage may impact benefits you qualify for.
For instance, if you were previously married for more than 10 years and collecting Social Security benefits on your ex-spouse’s account, you may forfeit those payments if you remarry.
Marriage is a recognized life event, so you may be allowed to change your insurance options outside the regular autumn time window. You should also be aware that if you were previously divorced and getting substantially discounted insurance via the healthcare.gov exchange, when you remarry, your insurance costs may go up if your joint income goes up.
If you are the widow of a qualifying veteran, you may be disqualified from receiving VA Aid & Attendance benefits if you remarry.
Setting Expectations with Your Children
If you have children from a previous relationship, regardless of their age, it’s important that you set realistic expectations for your children as you enter into a new marriage relationship. The children were most likely brought up in different financial circumstances, so it’s important to talk as a family about new financial expectations. Even discussions about holiday gift-giving norms can be impactful.
Estate planning is vitally important in remarriage. These are the documents that will take care of the people you love. Contact an experienced Estate Planning Attorney who can help you protect your assets and finances in the future.
Reference: CNBC (March 7, 2022) “Remarrying? Here are financial considerations to keep in mind before saying ‘I do’”
