Remarriage and Your Finances
Last week I blogged about the newlyweds out there, and what they could do to start their financial journey on the right path. Today we are going to talk about another type of newlywed, the newly remarried. The newly remarried couples have interesting financial considerations as well. Today let’s look at three items for consideration when remarrying:
Beneficiaries – When remarrying it is vital that the couple check all investment, pension, retirement, and other assets to ensure that the proper beneficiaries, and contingent beneficiaries, are listed. Beneficiaries listed on the asset are the defacto legal designation so if this listing is incorrect, it can mean assets transferring to someone that was not intended. For example, suppose John updated his will so that his new partner would inherit all assets, however never removed his ex-spouse from the beneficiary designation listed on a life insurance policy. In this case, upon death the life insurance policy would still transfer to the ex-spouse, even if the will stated that the current spouse was to inherit all assets.
Pre/post-nuptial Agreement – While these legal documents typically get a bad reputation, they meet a very important objective – to protect all parties financially. If crafted well, the documents will ensure that all parties receive a fair settlement in the case of divorce. In the case of remarriage, it is possible that you would want some assets, including inherited property or sentimental items, to be held back for children or others. By crafting a legal agreement articulating who would receive which assets, and which would be reserved for others, the stress and tension if there should be a divorce can be diminished. If a pre/post-nup isn’t the best solution, consider a waiver that would relinquish rights to particular assets instead of a comprehensive document. At the time of marriage, legal agreements may not seem important, but crafting it fairly and without pressure can ease disputes in the future.
Communication – While saying that communicate is important may seem cliché, I couldn’t finish this blog without actually putting it out there. No matter how old you are or what kind of relationship you are in, communication is key. In the case of remarriage, it is important to discuss not only what your household financial goals will be, what your individual financial picture looks like, and what kind of actions need to take place (changing beneficiaries, retitling assets, etc.) but also, what your previous history has taught you about money and how you hope to move forward in this new relationship. Establishing an open line of communication early can save a lot of misunderstanding later.
If you have questions about how this remarriage may impact you, contact us to set up a time to discuss your unique situation.