Financial Planning Considerations for Second Marriages

A second marriage often involves more complex planning than a first marriage. Before you set a date to tie the knot, make it a point to discuss or consider the following questions and determine how you need to deal with them in order to meet your obligations and protect your assets.

What mistakes do you not want to repeat?
A 2010 survey done by American Express found that nearly 1 in 3 couples say finances cause the most stress in their relationship. Did you make financial planning mistakes before or during your first marriage that you’d like to avoid the second time around? Write them down and find out what planning solutions will help prevent them this time.

Do you want a prenuptial agreement?
This can protect your assets in the event of divorce and preserve assets for your children in the event of your death.

Do you and your new spouse have life insurance?
Who should be the beneficiary? If you both have life insurance with your respective children as beneficiaries, you can change the beneficiary arrangements or get new policies intended for benefiting each other.

What real property do you have and want to keep?
Do you want to sell your home or your new spouse’s? Consider what will happen to the gains of either sale—whether they will go toward your joint assets or whether they should be preserved for the children.

Have you reviewed each other’s divorce decrees?
It’s important for each of you to understand how the others’ divorce decree will impact your budget and assets. You should both be aware of any incoming or outgoing alimony or child support payments, health insurance or life insurance that must remain active, or any obligation to pay out future retirement. For example, if an ex-wife has already been awarded survivor benefits for the husband’s pension, his new wife will need to plan accordingly to ensure her retirement income needs are still met in the event of the death of her husband’s death.

What do you want your children to get after you’re gone?
Jointly owned assets will revert to the spouse at death so remember that if everything goes to your spouse, there’s no guarantee your children will get anything after his or her death. Simply naming your children as a contingent beneficiary on your will, life insurance, or retirement account, will NOT ensure they get the assets. This will only apply should the spouse pre-decease the account owner. You will want to meet with a qualified estate planning attorney to discuss the best strategy to ensure both your spouse and your children are taken care of in the event of your death. You may want to consider a trust, separate ownership and a will.

At Kramer Wealth Managers, we want to help you create the best possible future with your new spouse by helping you both protect your shared and individual interests. Contact us today to find out how we can help get your second marriage plans in order.