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Getting married is not only a major life event, but one with significant financial implications. That’s especially true of second or blended marriages, which often come with added complexities, such as children from prior marriages and financial obligations like alimony or child support on the part of one or both partners.
To get off to the best possible start, couples embarking on a new marriage may want to resolve a few issues even before they head to the altar. Here are some ways to plan for a happy, harmonious, and financially successful future together.
Key Takeaways
- One key to a successful blended or second marriage is discussing your finances openly and honestly.
- Couples often have very different money-management styles and have to learn to appreciate each other’s perspectives.
- You may want to establish both individual and joint accounts to meet your respective financial obligations.
- Remarriage calls for reviewing your will and other estate planning documents, as well as the beneficiaries on any investment accounts and life insurance policies.
- Prenuptial agreements can be useful in some instances.
Talking About Money Early and Often
Communication is key to a successful marriage, whatever the topic happens to be. Unfortunately, many people have a natural reluctance to discuss money matters, even with a prospective spouse.
“You have to be really open with each other,” said Patricia Schiff Estess, author of ‘Remarriage and Your Money: Once Again, for Richer or Poorer’. “That means laying out what you’re coming into the marriage with, including your assets, debts, income, and expenditures.”
Couples often find that they have very different styles when it comes to money management, Estess noted. One might be a saver, the other a spender. One might be more of a risk taker, the other risk-averse.
By the time of a second marriage, a person’s approach to money is often “baked in,” Estess said, so converting your partner to your way of thinking, or vice versa, may be an unrealistic aim. “The only way to deal with it is to establish a very honest communication system, where you respect what the other person believes and try to figure out an arrangement that works for both of you,” she said.
In other words, you’ll sometimes have to agree to disagree on financial matters during the course of your marriage. “If you’re afraid to disagree,” Estess said, “you just build up resentment.”
In some cases, meeting with a counselor or financial planner with experience in these issues can be helpful. They may be able to suggest ways to defuse potential conflicts both now and in the years ahead.
Important
You generally aren’t responsible for any debts your spouse incurred before you married. The same is often true for debts they incurred during the marriage—unless you borrowed jointly—although those rules vary by state.
Blending Finances: Options and Approaches
Remarriage may require some rethinking of your current financial arrangements. Those include how your financial accounts are set up.
Harrison Kennard, a certified financial planner with Lakewood Wealth Management in Ann Arbor, Michigan, recommended establishing joint accounts with your new spouse. “You could still maintain separate accounts but hold them jointly in both names,” he explained. “One advantage is that if one spouse dies, the other has immediate access to the funds. Another advantage is that both spouses can pull money out, deposit, and do everything needed, especially in an emergency.”
For example, a spouse who has child support, alimony, or debt obligations could pay them out of “their” joint account. If couples wish, they could also set up a third joint account to cover their routine household expenses.
One exception, Kennard said, is inheritances, which he usually recommends be held in a separate account belonging to the heir. “Once commingled, they can become joint property,” he explains. That can be a problem in the unfortunate event that the new marriage fails.
Note
For tax purposes, your filing status is determined by whether you were married as of the last day of the year. So even if you remarry on December 31, for example, you’re entitled to file as a married couple, which is usually advantageous.
Protecting Children and Prior Commitments
If a partner has court-ordered child support or alimony obligations, those will continue to be a financial responsibility for that person. The other partner can also chip in if they both agree.
Parents may also have other, more voluntary, financial responsibilities to their children from a previous marriage, such as contributing toward college expenses, weddings, or down payments on first homes. These, too, deserve some discussion to avoid resentment on anyone’s part.
If the new marriage produces additional children, that can complicate matters further. Many couples try to work out arrangements so that every child, from whatever marriage, is treated fairly, while also recognizing that their money will only stretch so far.
Estate Planning in Blended Families
Remarriage is also a good reason to revisit your will and other estate planning documents.
In addition to revising your will to account for your new partner, it’s important to review and possibly update the beneficiary designations on your investment accounts, which generally take legal precedence over whatever wishes you expressed in your will.
If you have an individual retirement account, for example, it will pass to the person you most recently designated as your beneficiary upon your death, bypassing the probate process. In the case of older accounts, that might still be your ex-spouse rather than your current one—something you might want to change.
Similarly, if you previously established trusts to provide for your spouse, children, or other heirs, you may wish to revise those, where possible. An experienced estate planning attorney can be of help here.
If you have a power of attorney, advance directive, living will, or similar legal documents, you will likely want to change them to entrust those decision-making responsibilities to your new spouse.
Bear in mind that this can be a sensitive area, especially for older children concerned about their future inheritances. It’s often worth explaining your decisions and your reasons for them to head off any unpleasant surprises and family rifts in the future.
Tip
If you have life insurance policies, make sure your beneficiary designations on them reflect your current wishes.
Prenuptial and Postnuptial Agreements
Prenuptial agreements have gotten a lot of attention in recent decades, largely due to the highly publicized marriages and breakups among the rich and famous.
Like many financial decisions, prenups have their pros and cons. As Estess pointed out, “with a prenup, the starting line is mistrust—with some notable exceptions.”
Kennard agreed that they aren’t always the best way to get a marriage off to a good start. “Whether you choose to do a prenup or not, you should have a money conversation,” he said. “Learn each other’s values, set goals, and be on the same page in a marriage.”
As to the exceptions, Kennard said, “We generally suggest a prenup if there is a significant gap in how much each spouse is bringing into a marriage. If there is a business or children that rely on those assets or income from assets, we also suggest at least consulting with an attorney about doing a prenup.”
Postnuptial agreements are much like prenups but are initiated only after the marriage has taken effect. They can be useful in some instances, especially in clarifying how the couple’s assets would be divided in the case of divorce. However, many couples would rather focus on making their new marriage a success than plan ahead for its possible failure.
Should Couples in Blended Marriages Keep Finances Separate?
In most cases, you might want to combine some accounts and keep others separate. That will allow you to meet your mutual obligations, such as everyday household bills, as well as those that might belong to each of you individually, such as child support or alimony. Note that even if you do merge your finances, each of you will continue to have separate files at the credit bureaus, so marrying will not affect your credit histories or credit scores.
How Can I Ensure Children From a Prior Marriage Inherit Assets?
Whether your children inherit your assets will depend on your will, your trusts (if any), and the beneficiary designations on your life insurance policies, IRAs, and other accounts. If you leave everything to your new spouse and are the first to die, they will have control over who inherits those assets.
What Role Does a Prenup Play in a Second Marriage?
A prenuptial agreement can clarify how your assets will be divided if you divorce, as well as certain other financial matters. It can be especially useful if, for example, you have a family business that you wouldn’t want to see split apart in a divorce. However, some couples feel that it starts the marriage off on the wrong note—one of mutual suspicion.
The Bottom Line
Successful second or blended marriages are built on trust, honest communication, and careful financial planning. Each spouse will bring their own ingrained attitudes toward money to the marriage, and the two of you may not agree on absolutely everything. But if you approach your decisions with mutual respect, trust will build up over time—and, ideally, your financial security will too.
