Family finances can be a big issue in any circumstances. Blended families and their finances are even more significant, where two sets of often well-established financial histories and philosophies try to merge into one. It is quite commonplace for the attorneys at Beck & Lenox Estate Planning and Elder Law, LLC, to deal with the unique challenges brought by blended families.
Kiplinger’s recent article entitled “Yours, Mine and Ours: A Checklist for Blended Family Finances” says that a blended family is one where people have remarried, either after a divorce or the death of a spouse. Sometimes it’s older couples already in retirement. In other cases, it’s a younger couple still trying to raise children.
However, regardless of the specifics of any individual situation, when families blend, so do their finances. That is when things can get problematic, if careful planning and communication don’t occur.
Here are a few things to consider:
Money habits. People are raised with different ideas about money. They’re influenced by their parents or by the circumstances of their formative years. Some people are exceptionally frugal and save every penny and seldom, if ever, splurge on something just for fun. Others spend with reckless abandon, unconcerned about the unexpected expenses that life can throw at them at any moment.
Many people are somewhere in between these extremes. If you are entering a serious relationship, you should speak to your new partner about how each of you approaches spending money.
Financial accounts and bills. Once you learn each other’s financial philosophy, you will have decisions to make. These include whether to blend your financial accounts or keep them separate. If the two of you are closely aligned with your finances and how you approach spending, you may want to simply combine everything. If you’re older, have adult children from prior relationships and are more financially established, you may decide to keep things separate.
For many, a hybrid approach may be best — keep some things separate, but have common savings, investments and household accounts to reach your blended goals.
Family. When there are children from a prior marriage — especially young children — additional financial situations will need to be addressed. Issues of child support and how it fits into the overall budget is one concern, as is the status of college funding for the children.
Scheduling an appointment with an experienced estate planning attorney will help blended families arrange their finances in a way that is healthy and realistic for their new family dynamic.
Reference: Kiplinger (June 27, 2022) “Yours, Mine and Ours: A Checklist for Blended Family Finances”