Finances in Your Second Marriage
When a couple gets married, finances are always a potentially complex and contentious issue. Even in a first marriage, spouses often have trouble deciding whether to keep their finances separate or combine them. And if they decide to combine them, who controls what areas of the household finances? Financial considerations of a divorce can get complicated as well, especially when there are valuable assets and property at stake. When you get remarried, you need to have this conversation all over again with your new spouse.
Financial Considerations for Second Marriages
Things can be a lot more complicated financially for individuals who marry for the second time. Much of the couple’s approach to finances will be determined by how finances were handled in their first marriage, mistakes that were made which they want to avoid making again, and similar factors. Add in the fact that many individuals bring children from prior relationships into their second marriages, and they may also have financial obligations to their ex-spouse.
To help ensure that a second or subsequent marriage starts off on the right foot financially, there are some steps individuals should take from the outset:
This may be a difficult step for some people, but the first thing individuals should do when they are entering their second marriage is to lay all of their financial cards on the table. It is best to be upfront and let your soon-to-be spouse know exactly what you have and what do you owe. It is understandable to want to protect your finances going into a second marriage, especially if you have had financial issues and difficulties with an ex-spouse. But it is best to get all of this out in the open ahead of time, so there are no surprises down the road. Your partner does not necessarily need to know every intricate detail of your financial life, but they should at least have an overall understanding of your income, assets, investments, and financial obligations.
Set Up a Workable System for Handling Household Finances
Once you have figured out each other’s financial picture, it is important to have a discussion about how the finances should be handled once you are married. There are a number of ways you can approach this. For example, for couples who are a little apprehensive, they may choose to keep their finances separate at first, then later convert them to joint accounts once they are comfortable and assured that the marriage is going to work. Others may choose a variation of this plan, where finances are mostly separate, but each spouse contributes a certain amount to a joint account that is used to pay all of the household bills. If both spouses are self-supporting and already have a high net worth, they may be comfortable just keeping everything separate and paying bills as they come up. There is no right way or wrong way to handle the household finances, it is entirely dependent and the couple’s specific circumstances and how they decide to handle it.
Consider a Prenuptial Agreement
Traditionally, there has been a stigma attached to prenuptial agreements. People have viewed them as a sign of a lack of trust, or a belief that the marriage will not work out. The truth is, prenuptial agreements serve a very important purpose, particularly for individuals who are bringing a significant amount of assets into a marriage. A prenup allows couples to clearly define how assets will be divided in the event of a worst-case scenario. This provides couples with assurance and peace of mind as they enter their marriage, knowing that if the marriage does end in a divorce, the chances of financial conflict during the proceeding are greatly reduced.
Update your Estate Plan
When you are entering into a second marriage, it is essential that you review and update your estate plan. You will need to ensure that your new spouse is provided for while balancing the need to provide for your children and in many cases, for your ex-spouse (at least to some degree). Thoroughly review all of your estate planning documents; e.g., your will, trusts, life insurance policies, power of attorney, etc. Make sure that you have the right beneficiaries and the right people appointed for important roles such as executor of your estate. You should also look at your bank accounts, retirement accounts, investment accounts, and other important assets to ensure that they are updated to reflect your current circumstances.
Getting Married for the Second Time in Kentucky? Speak with an Experienced Family Law and Estate Planning Attorney
If you are entering into a second marriage, it is a good idea to sit down with a legal professional who can help you work through the important financial issues that need to be addressed. At the law offices of John H. Ruby & Associates, we have extensive experience with both family law and estate planning matters; and we have an in-depth understanding of how these two areas of law converge in the lives of many individuals, especially those who are getting married again. We can sit down with you, review your situation and help you come up with a plan that makes sense for the next season of your life.
For a personalized consultation with one of our attorneys, call our office today at 502-895-2626. You may also send us a message through our online contact form or stop by our Louisville office at your convenience.