Wednesday, 20 June 2018

Congratulations on finding love again and deciding to remarry!

But as you're probably aware, while marriage is an serious emotional commitment, it has significant financial implications as well, which is why it's essential for second-time brides and grooms to engage in thoughtful financial discussions and planning before saying "I do."

For starters, there are many variables in a second marriage that are typically not factors in a first marriage.

 In a second marriage, there may be children from first marriages to consider, and, of course, you both bring previous financial experiences, expectations, and obligations to the new union.

For example, have you been financially independent for many years, and now need to learn how to manage finances with someone else? Are you comfortable  combining finances, or do you want to keep some aspects separate? Will either of you require a prenuptial agreement to protect assets? Will divorce agreements impact your finances?

Jennifer Williams, a BBVA financial planner, says communication is critical in a second marriage, as you will need to address issues that probably didn't exist the first time around. 

Understand the impact of your divorce agreement

“Make sure you understand what the obligations are from the divorce decree, and then make sure all of your beneficiaries and estate planning documents are in order and updated,”  Williams said.

Some provisions in divorce decrees are legal, non-negotiable obligations, such as alimony and child support. However, some states may allow minor adjustments if one partner remarries. Before you marry and combine finances, Williams recommends consulting an attorney to ensure a clear understanding of the decree and your soon-to-be spouse's obligations.

Bank accounts and other financial responsibilities

Have a clear understanding of whether you want to keep separate checking and savings accounts, or open a joint account. Also, set some ground rules about how you want to communicate about spending — is there a dollar amount you can agree on that triggers a conversation?  And make sure you are on the same page when it comes to paying bills, saving money, or overseeing investments.  

And it's important to discuss retirement savings goals and accounts. "Some divorce decrees give a certain amount of retirement assets to the ex-spouse,” Williams said. “It might have to get split, depending on what stage and how newly divorced they are.”

Debt and marriage

Make sure to discuss how will you pay down credit cards, loans, or mortgage debt.  Will each person be responsible for the debt they bring to the marriage, or will you work together to pay it off? How will you utilize and manage credit cards? Will you have separate or joint accounts?

Wills and trusts

If there are children from the previous marriage or marriages, how property and assets will be distributed upon either spouse's death is always an important issue to discuss and settle before marriage. Williams stresses "all beneficiary and estate planning documents should be in order and updated."

Even if there are not children, it's essential to update these important documents. Review any existing wills and trusts before you marry, Williams recommends, and once you've tied the knot, make sure to update documents as soon as possible. Old language leaving assets to a former spouse or other family members may not be reversible, even if you are remarried.

What about insurance?

Before you remarry, review old policies and decide if you need to phase them out, ramp them up, or add new kinds of insurance to the mix. What about life insurance, disability, long-term care, and health insurance? Do you need to combine insurance accounts or update beneficiaries on any existing insurance policies?

Communication is key

Money is one of the top issues that divides married couples. According to Divorce Magazine, financial incompatibility is the second most common reason couples split. Most experts agree, however, communication can help couples find common ground when it comes to money.

“Every couple is different, but they definitely do need to sit and have the conversation to understand the finances," Williams said.

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