Marrying Again: Making money and marriage work the second time around

by | Sep 28, 2006 | Sep/Oct 06 | 0 comments

The old Frank Sinatra tune opines, “Love is lovelier the second time around.” That might be true, but merging money and marriage may be anything but lovely for couples going into marriage for the second (or third or fourth) time.

If working out money issues is difficult in first marriages, it doesn’t seem to get any easier with subsequent marriages. You might assume that living through the money problems in one marriage actually gives second- and third-timers a head start on avoiding the mistakes that put relationships on the rocks. Not so, say marriage counselors, because second and subsequent marriages come with their own sets of difficulties.

For starters, more of these marriages are likely to struggle with the problems of blended families — children from first and second marriages, ex-spouse interference or expectations, accumulated assets (and debt) from an earlier marriage and leftover bitterness from that marriage. Even when a first marriage ended because of the death of a spouse and not divorce, the next marriage can be complicated by the merger of two families, more complex assets and unrealistic expectations.

Get the (financial) facts

Not surprisingly, the best place to start for couples thinking about a second or third marriage is to talk. All the rules for first marriages apply — only now they are twice as important. Take the time to know what you’re walking into; learn about your prospective partner’s money habits, attitudes and beliefs. Have frank conversations about the financial facts of your individual lives and your relationship.

Especially important in second and later marriages is a disclosure of legal and moral obligations. Child support, alimony, college for children from an earlier relationship and promised financial help to adult children all factor strongly into these discussions. Put it all on the table — assets, debts, responsibilities and goals — even those you don’t plan to share with your new spouse. Straightforward, complete revelation is the beginning of trust and understanding.

Make fair agreements

Then, consider a prenuptial agreement. These agreements make sense for people with significant assets, an established business or an inheritance. They are also desirable if one partner is giving up a career to raise a second family. And if there are children from an earlier marriage, a prenuptial agreement can ensure that provision is made for them. An agreement can help you keep assets accumulated before marriage separate from those you accumulate during your marriage, especially important if you live in a community property state like Texas. You may also specify whether assets accumulated during the marriage will be owned jointly or kept separate.

Whatever decisions about property, rights, children, assets and liabilities that you choose to incorporate into a prenuptial agreement, be sure you each consult your attorney to draw up the final agreement for your signatures. Don’t sign any agreement that seems unfair or that you can’t wholeheartedly endorse.

Pay attention to the basics

Of course, day-to-day details of money management may be the biggest headaches for remarrying couples, and those aren’t much different from those in first marriages. There is one bright spot, however: When you remarry, you’re probably savvier about money management than you were in earlier relationships. But you are also likely to have more money and more money issues to manage in a second or third marriage.

The basics are the same. You’ll need a realistic, flexible budget; shared financial goals; a savings plan; investments; adequate and appropriate insurance; an estate plan; agreements about money management; and a commitment to keep the dialogue going. Also critical is a review of all your accounts, policies and benefits to ensure you aren’t paying unnecessarily for duplicate coverage or services.

As in first marriages, steering clear of financial landmines is just as applicable to second timers. Accumulating debt, a lack of financial planning and goal setting, and an unwillingness or inability to work together on money issues can be as damaging to second and third marriages as they are to marriage novices.

Update your financial life

Once you are married, you’ll want to make a thorough review of your estate plans. Make appointments with your attorney and financial planner to evaluate all documents. Wills should be updated, and beneficiaries should be changed (if desired) on your life insurance policies, pension plans, retirement accounts and other documents. Be careful to complete and file the proper paperwork to make the changes you want; if you forget or neglect the details, you take the risk that your assets may pass to someone who uses them in a way you hadn’t intended.

Systematically examine all sources of income, debts, assets and expenses. Determine how your new married status might change your finances (for example, Social Security benefits or alimony), and make any adjustments that are possible to compensate for lost income or additional expenses.

In the final analysis, second, third and fourth marriages are just as susceptible to financial stresses as first marriages are. If love IS lovelier the second time around, it’s worth working hard to make sure that money doesn’t sour a beautiful relationship.

Do you need a prenuptial agreement?

A look at divorce statistics may have you second-guessing your decision to merge money with your soon-to-be spouse. But taking steps before marriage to solve the money problems of a divorce? Many would call that skeptical, callous and downright unromantic.

Still, financial experts say that couples would be well served to think about that unthinkable outcome to their marriages. Why? More couples than ever are marrying later in life; they have accumulated assets and established themselves in careers before finding a mate. Others are marrying for the second or third time and have assets from earlier marriages, child support or inheritances to consider.

In growing numbers, couples disagree with the notion that a prenuptual agreement taints their marriage with suspicion or the expectation of divorce. In fact, they claim, it puts the marriage on a firm footing, and the discussion it requires strengthens their trust in one another. They find nothing unromantic about planning their lives together, especially when their assets are complicated. Further, they say, a prenuptial agreement is simply a good way to anticipate and resolve issues that could cause problems for their marriage later on.

Prenuptial agreements are most commonly used to prearrange financial matters and protect future inheritances. But they can also be used to specify rights and privileges within a marriage, or they can provide for the division of property and custody of children if a couple divorces. You may also accomplish the same goals by making a post-marital agreement, but these agreements are less common than those made before marriage.

Do you need a prenuptial agreement? The answer is probably not if you are both young, have not accumulated any real assets and are not likely to inherit a sizeable amount of money or property. In this case, state laws that establish how property is divided in marriage may fit your needs, and no other contract would ever be necessary.

If, however, you are coming into marriage with considerable assets, including stocks, real estate, other investments, cars, jewelry, art or right of inheritance, you should consider a prenuptial agreement, regardless of your age or previous marital status.

To get started, talk to one another about what you want to include: assets, children from an earlier marriage, inheritances and so on, and decide what agreements you might want to make with one another. Then, consult an attorney for advice. Incorporate your agreements into a written contract drawn up by one or preferably both of your attorneys. Make sure you both believe the agreements are fair and equitable before you sign anything. In the contract, specify a date or time frame for reviewing and, if needed, revising theagreement — every two to five years, for example.

Author: Judy Alexander

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