When it comes to addressing finances and remarriage, couples should look at the past. This should include the way in which each person handled finances, and their pre-marital liabilities and assets, along with the present (e.g., new benefit options) and the future. This will likely show how they’ll handle finances as a unit or protect themselves and loved ones in case of death or divorce. Beck & Lenox Estate Planning & Elder Law, LLC, has many happily remarried couples as clients and notices that it is not unusual for issues to come up due to the dynamic of blended families.
CNBC’s recent article entitled “Remarrying? Here are financial considerations to keep in mind before saying ‘I do’” says that it’s important to release any financial skeletons from the closet. Here are some smart financial moves for new parents:
It’s critical that blended families have similar talks with their children. The children were most likely brought up in different financial circumstances, so it’s important to talk as a family about new financial expectations.
After the prospective spouses identify their collective financial situation, there are a few topics to consider. For instance, if you were previously married for more than 10 years and collecting Social Security benefits on your ex-spouse’s account, you may forfeit those payments if you remarry. Your new combined income may also result in a higher tax bill. This is sometimes called a “marriage penalty.”
Moreover, financial communication is a crucial best practice to achieve financial success in a relationship. After you remarry, look at the impact on benefits.
Marriage is a recognized life event, so you may be allowed to change your insurance options outside the regular open enrollment window.
You should also be aware that if you were previously divorced and getting substantially discounted insurance via the healthcare.gov exchange, when you remarry, your insurance costs may go up if your joint income goes up.
It’s also smart to consider protecting pre-marital assets that were in your name only. You should consult an experienced estate planning attorney to discuss your finances and remarriage plans. They may advise against commingling some or all assets, and suggest a trust, segregating pre-marital assets from marital assets, to protect you in the event of divorce.
Estate planning is vitally important, if you have a new family with children. These are the documents that will take care of the people you love. Sit down with an estate planning attorney like the ones at Beck & Lenox to review your current documents and any revisions or new documents that may be in order.
Reference: CNBC (March 7, 2022) “Remarrying? Here are financial considerations to keep in mind before saying ‘I do’”