Planning to Re-Marry

If you’re planning to remarry, you must decide
how you and your fiance will combine your
finances, and you’ll need to plan a financial
strategy that considers the assets, liabilities,
and financial responsibilities that each partner
brings to the marriage. You’ll find that financial
planning for marriage is more complicated
than it was the first time you got married,
because your life isn’t as simple now. You
may have acquired more assets. You may
have children now. You may want to plan
more carefully this time, now that you’re
familiar with the financial consequences of
divorce or the death of a spouse. You’re older,
perhaps substantially older, and you and your
spouse may be concerned with retirement
and/or estate planning.
Tip: Many of the issues you face will be no
different than the issues individuals marrying
for the first time must deal with. These issues
include budgeting, savings and investments,
insurance issues, integrating employee and
retirement benefits, and property ownership
issues.
What obligations from your past
can haunt your future marriage?
Debts and bad credit
It’s not uncommon to have extensive debt and
a less-than-spotless credit history, particularly
if you’ve been through a divorce. However,
debt and/or credit problems that either of you
have can affect whether or not you can obtain
credit as a couple once you’re married and
can lead to arguments that can strain your
marriage. Before remarrying, make sure that
you and your fiance understand what debts
each of you owe and determine whether one
or both of you have marks on your credit
history. Consider ordering copies of both your
credit reports from a major credit reporting
bureau, then sit down and honestly discuss
your current financial position. Even if you’re
embarrassed about how much you owe or
how poor your credit history is, don’t hide that
information from your partner. Although he or
she may be surprised to find out that you’ve
had past financial problems, it’s better to
disclose this.
There are positive steps you can take to
improve your financial position as a couple.
For example, you can go through credit
counseling together, keep your credit and/or
finances separate, and take measures to
protect the assets of one or both partners
against the claims of an ex-spouse or creditor.
Children from a former marriage or
relationship
Children, while a blessing, can strain a
marriage financially, particularly when the
children are from one or more former
marriages or relationships. You or your fiance
may have an obligation to pay child support or
may have joint or sole custody of one or more
children. You may be concerned that an
ex-spouse will demand even more child
support in the future, or you may wonder who
will be obligated to pay for the children’s
expenses or for their future college education.
Adult children present special problems. In
particular, you’ll want to carefully plan your
estate to avoid the conflicts that can erupt if
your adult children resent your current spouse
or fear that he or she will inherit or mismanage
your estate.
Claims an ex-spouse has on your present
or future finances
One or both of you may have an ex-spouse
who may be entitled to a portion of your
current or future earnings or benefits. For
example, you or your fiance may have to
make alimony payments that may seriously
affect your finances as a couple, particularly if
the ex-spouse goes back to court seeking
more money. In addition, an ex-spouse may
be the beneficiary of a life insurance policy or
may be entitled to a survivor’s benefit from
your spouse’s pension plan. When you
remarry, you should review your will, your
insurance policies, and your pension plan.
You may want to change your beneficiary
designations, although this may not always be
possible. For example, if you’re divorced and
your ex-spouse has been awarded a
court-ordered survivor’s annuity, you may not
be able to name your new spouse as
beneficiary.
What you can do to ensure that
your future financial
relationship stays healthy
Before getting married, have an honest
talk about your finances
Before getting married, you and your partner
need to discuss how you handle money,
because money is a leading source of conflict
in a marriage. Differences in how you and
your partner handle and think about money
can lead to hurt feelings, insecurity, and
arguments. One person may be a saver, the
other a spender. Also, you may have different
issues can be especially troublesome when
you remarry, because you or your fiance may
feel financially vulnerable if a previous
marriage ended in divorce, particularly if it
ended, in part, because of financial troubles.
You and your fiance must work out the terms
of your financial relationship, setting up a
mutually agreeable plan. Now is the time to
decide if you want to keep separate bank
accounts and to determine whether you want
to pay expenses together or separately.
Consider disclosing all your obligations and
income to your partner to avoid any conflicts in
the future and so that you can make sure that
any budget you set up is realistic.
Consider using prenuptial and postnuptial
agreements
Prenuptial and postnuptial agreements are
contracts used by couples of all ages to define
their rights, duties, and obligations during
marriage and to determine what happens in
the event the couple separates or divorces or
one partner dies. If the contract is written prior
to the marriage, it’s called a prenuptial,
premarital, or antemarital agreement. If it’s
written during the marriage, then it’s called a
postmarital agreement. Couples who are
remarrying should consider using marital
agreements if they have substantial assets or
children to protect and/or want to avoid some
of the financial trauma that could occur if their
marriage ends. They can spell out what assets
and liabilities each partner is bringing into the
marriage and determine how the assets
brought into the marriage, and those acquired
during the marriage, will be divided. They may
also have an impact on your estate planning.
Consider keeping credit separate
One way to help you and your future spouse
maintain a good financial relationship is to
continue keeping your credit separate even
after you marry. Instead of applying for joint
credit cards, each partner can keep his or her
own credit cards. This can protect you in
several ways. If one of you has good credit but
the other doesn’t, it can help the partner with
good credit keep it. If you experience financial
difficulties as a couple, keeping your credit
separate will ensure that if one spouse’s credit
suffers, the other spouse’s credit rating will
remain unaffected. Keeping credit separate
will also make it likely that if this marriage
ends in divorce, only the individual who
incurred the obligation will have to pay it. In
short, you won’t end up paying your
ex-spouse’s debts. If you or your partner have
been burned financially in a relationship
before, keeping separate credit might make
you feel more in control and may prevent
arguments that can hurt your current
marriage.
The downside to keeping separate credit is
that it can be complicated. If one spouse is
working while another isn’t, the nonworking
spouse may have trouble qualifying for his or
her own credit. Trust issues and arguments
over credit may also arise should one spouse
have more credit or more accounts than
another. In addition, you and your spouse may
be able to qualify for a credit card or a loan
much more easily if you apply together rather
than separately, so keeping your credit
completely separate may not be feasible.
Furthermore, if you and your spouse run up a
lot of expenses on both your separate credit
cards, you may have to face the option of
paying off only one spouse’s card, while
sacrificing the good credit of the other; this
scenario could generate some tension or
conflict.
Pay close attention to the way your
assets are titled
There are several ways ownership of assets
can be designated. Couples who are
remarrying should pay close attention to the
way assets acquired after they marry are
titled, because how their assets are owned
may affect their current finances as well as
determine who will receive the assets after
they die.
For example, if you and your partner buy a car
and sign the loan paperwork together, you
own the car jointly (as joint tenants). Owning
your car this way can be advantageous
because it means that neither of you can sell
the car without the other’s permission, and if
one of you dies, ownership of the car will pass
immediately to the other. (Note: Either of you
can sell your interest in the car, even if you
can’t individually sell the car outright.)
However, joint ownership can also have
certain disadvantages. For example, if your
partner owes back child support, his or her
ex-spouse may be able to claim that the car
should be sold and the money used to pay
back child support, and the court may order
this. Or, if your spouse owes money to a
creditor, the creditor may be able to place a
lien on the property or force you to sell it to
pay off the debt. The fact that you aren’t
responsible for the debt won’t affect the
creditors right to your spouse’s share of the
property.
In addition, individuals remarrying should
carefully consider how holding assets can
affect their estate planning goals. For
example, if you have children from a previous
marriage and you want to make sure they
receive your assets when you die, consider
setting up a trust for the benefit of the children.
To make sure that your spouse has access to
funds immediately after you die, you may want
to set up a joint savings account.