Embarking on a new journey, like marriage, is exciting. And for those who are entering into their second or third marriage, this can be a time for fresh starts and new possibilities. As the nuptials draw nearer, there are some important financial tasks to tend to first. Approaching your new marriage with honesty, transparency and trust can help build the foundation for a financially sound future together. If you haven’t already, consider adding these six tasks to your “to-do” list before the big day.
Task #1: Ask the Tough Questions
Getting married later in life means having a much more complex financial picture than you did in your 20s or 30s. Before tying the knot, you’ll want to sit down with your partner and ask some tough questions that can help paint a better picture of your combined financial standings.
Some important questions to ask include:
- How much debt do you have?
- What is your credit history?
- What are your assets?
- Do you have any obligations from your previous divorce, such as spousal support or child support payments?
If you find it hard to discuss the topic of finance with your partner, remember to approach these questions gently. You’re not accusing them of poor money management, nor are you looking to shame them for debt they’ve accrued. Remind them that you’re in this together, and you want to be mindful of their financial standings as you build this new partnership moving forward.
Task #2: Consider a Prenuptial Agreement
Some people may consider signing a prenuptial agreement, especially when getting remarried. This can be especially true if they’ve gone through a messy divorce in the past, or if they’ve accumulated a significant amount of assets in their lifetime. A prenuptial agreement can protect both parties in the event of a separation, as the terms of divorce are clearly outlined and agreed upon ahead of the marriage.
It can be tough to talk to your partner about “what if” scenarios ahead of the wedding, but a bit of planning now can help prevent headache and heartache later down the road.
Task #3: Reevaluating Your Estate Plan
If you or your spouse have children from a previous marriage, then it’s crucial that you figure out estate planning in the event that you or your spouse passes away. However you want to distribute your funds between children is up to you and your significant other. Take some time ahead of the wedding to discuss your options. Once you’re married, you’ll want to have a clear picture of how your combined estate will be divided among your children and stepchildren.
A financial advisor can help you develop an estate plan that reflects these new changes to your family. Additionally, he or she can work with your children and stepchildren to understand your decision and become good stewards of your wealth.
Task #4: Combining Your Finances
If you’ve had your own savings and checking account for years now, you’ll want to consider how you and your spouse should handle your banking needs. You may find that keeping things separate is easiest for both parties, or you may be more comfortable combining accounts.
Another option is to utilize a “three-pot system.” Each spouse has their own separate account and then they also have a joint account. The combined account is for joint expenses, such as house costs, groceries, etc. Doing something like this allows both parties to have individual expenses and freedom while deciding what they should pay together.
Task #5: Discuss “What Ifs” & Update Your Beneficiaries
Talking through some “what if” scenarios isn’t always fun, but with this life change around the corner, it’s important to do so now. You’ll want your partner to be knowledgeable about any life insurance policies you have, what funeral arrangements to make, how to handle incapacitation, how to access accounts and other assets. It’s possible you may still have your ex-spouse listed as an emergency contact or beneficiary in certain instances, now is a good time to update that information where necessary.
Additionally, you may have adjusted certain coverage like life insurance or long-term care insurance since you were last married. Run through all insurance policies and see where additional coverage may now be necessary, or where coverage may be redundant based on what policies your partner may already have.
Task #6: Consider Inheritance and Additional Assets
Generally speaking, any income or other property that is acquired while married will be considered community property. If you have children already, you may want to consider what they stand to inherit upon your death. These assets may need to be retitled, or funds may need to be kept in a separate account. Your financial advisor can help you understand how your future marriage may affect your children’s inheritance.
While it’s wonderful that you have found love again, there’s plenty to consider before tying the knot once more. As always, if you have any questions, it’s best to speak with an experienced financial professional so that they can help you navigate through this time in your life and plan for a stronger future together.