Money and marriage the second time around
- Financial Planning
Finding a new life partner the second time around can bring a lot of opportunity for new beginnings, but it also brings its own special set of challenges. How children will be affected, where you will live and how you will share responsibilities are some of the issues that you may need to deal with.
Financial aspects of your relationship can also present some hurdles to overcome. A second marriage is inevitably more complex than your first when it comes to financial matters and this can bring the potential for conflict if things aren’t dealt with honestly and decisively upfront.
Here are some key financial issues you might want to consider if you are looking to tie the knot again.
How will you handle daily finances?
There are many things to consider when joining up your finances – especially where children and stepchildren are involved. Decisions need to be made about whether you keep separate bank accounts or throw in together. Then there are practicalities about how expenses relating to dependent children will be managed – this can get quite tricky if some are costing more than others.
Different attitudes to spending and budgeting can also be another issue that doesn't arise until after you are already living together. Some people like to be very structured and frugal, while others might be more carefree with their spending. Decisions also need to be made on who will take responsibility for managing household expenses.
All these issues hold potential for misunderstandings to arise, so it is vital that some open and honest discussions are undertaken as early as possible to pre-empt and resolve any possible areas of difference.
Existing debts and mortgages will also need to be dealt with, so that both parties agree on who is responsible for what.
What are your long term financial goals?
Assuming you decide to blend your finances to at least some degree, there may be many longer term financial issues that need attention.
Housing is a major one. If you both have separate homes, will one be sold? How will the funds be invested or otherwise used? Do you want to sell both homes and make a fresh start in a new residence that can accommodate more children?
Investment assets are another area where decisions need to be made for long term harmony. What assets do you both already have and how will ownership and decision-making be shared on them? What are your attitudes towards investing and how do you plan to save for retirement?
A financial planner can play a key role in helping you work through such issues. An objective and expert ear that can help give you clarity and confidence in making decisions that will set you up for a future that is both prosperous and agreeable to all parties.
Do you need a prenuptial agreement?
If your situation is complex, then it may be useful to put expectations and guidelines down in writing via a prenuptial agreement. These are otherwise known as a binding financial agreement (BFA) and can be an excellent way to ease concerns over ownership and sharing of responsibilities, especially in the case of a future breakdown in the relationship.
It is essential to seek professional advice on how such an agreement will work and both parties must sign up to it in order to make it valid and binding.
Estate planning can be a minefield
Did you know that a second marriage automatically revokes the provisions of an existing will? This means that setting up new wills and estate plans is of paramount importance when you remarry.
Blended families automatically create the potential for major conflict over finances. If you or your partner dies suddenly, ex-spouses may come into the picture to make claims on the estate and even their relatives may enter the fray. How funds are shared between children can also be problematic, so it may be worthwhile setting up testamentary trusts to protect your estate assets and help manage distribution to children smoothly and fairly.
Again, professional advice is critical to getting on top of this situation and avoiding pitfalls of poorly documented estate plans.
Superannuation and how benefits are paid out upon premature death is another significant matter to attend to, due to the very specific rules that apply to the distribution of benefits. Speak to a financial planner to obtain a review of your benefit nominations and how they will be impacted by the second marriage.
Can you add any ideas from your experience of remarriage and what to watch out for financially? Join the discussion below.