A second marriage is more likely to succeed if the couple addresses key questions in advance, especially those concerning finances. You’ll want to have a clear vision of your current financial needs and what you expect the future to bring, according to a recent article in Investopedia, “Second Marriage Financial Matters to Consider.”
Let’s look at some topics of concern:
Assets and Liabilities. Do a complete review of both of your assets and liabilities. Assets include bank accounts, stocks, bonds, houses, cars, retirement plans, insurance contracts and other investments. Liabilities are things like your credit cards, student loan debt, car loans, and mortgages. In addition, note that there are rules in community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin) where asset ownership is treated differently: in these states, the law presumes that assets will be owned jointly.
Daily Financial Management. You should think about how you’ll manage your financial obligations on a regular basis. Some couples combine their checking accounts, and some keep them separate. However, you should create a new joint account, which both parties will make monthly contributions. Joint expenses can be paid from the new account, and other personal expenses paid for through the individual accounts.
Beneficiary Designations. Your retirement plans—like your IRA and 401(k)—have named beneficiaries. These should be checked regularly. The same thing should be done with your insurance policies and annuities. This is the perfect time to review current designations, and make sure that any agreements from your first marriage do not inhibit your ability to update your beneficiaries.
Update Your Estate Plan. A will states your final wishes and details how certain property will be distributed to your heirs. It also designates your executor, the person you nominate to make sure your wishes get carried out, and guardians for minor children. A second marriage is an excellent time to review your will, to see if you should draft a new one or modify the existing one. Blended family dynamics can also have an impact when reviewing your estate plan. If either spouse has children from a previous relationship, adjustments to your plan may be necessary.
Trusts and Trustees. Ask your estate planning attorney about trusts, they are a useful way to transfer wealth to children while imposing some restrictions. Dividing your assets between a surviving second spouse, the children from that marriage, and any children from a prior marriage may result in some tension. One way to avoid this is to give an independent trustee the ability to make adjustments so everyone is treated fairly and according to your instructions.
Taking the time to clarify these matters before you walk down the aisle, will allow you both to focus on the relationship and starting a new life together instead of financial what ifs. One way Family Estate Planning Law Group helps with the process of ensuring your wishes are respected and are communicated effectively is through holding a Family Meeting. This allows you, your loved ones, and other professionals involved in your planning to come together and clarify questions and make sure everyone is on the same page about your plan.
For more information on planning your estate in conjunction with your blended family or the Family Meeting, visit our website today to schedule your consultation!
Reference: Investopedia (May 29, 2018) “Second Marriage Financial Matters to Consider”