Financial tips for second marriages and blended families
From estate planning to savings priorities, there’s a lot to think about before saying “I do”.
Starting over with a new partner is exciting. But along with new love and new lives, couples entering second marriages are often also building new families blended with children from past relationships and those they may plan to have together. According to the 2010 U.S. Census Bureau, 16% of children living with two parents live in blended families (link to data: http://www.census.gov/prod/2011pubs/p70-126.pdf). Multiple commitments and family members can make for complicated finances. And, as we know, disputes about finances are often the main causes of marital strife. Planning and preparation can help ward off frustration and make the honeymoon last.
Discuss financial goals, spending habits, and debt early
You’re a spender, she’s a saver. You get child support from your ex, he doesn’t. Your oldest is heading to college, her youngest needs braces – what are your financial priorities? These are just some of the topics you should sit down and discuss with your partner before the wedding. Decide whether to comingle your finances or keep certain accounts or debts separate and, together, keep track of where your money is going each month.
Establish your new home
The delicate timing of buying and selling homes or rental lease dates can make this decision trickier than you think. It’s even more difficult when children are involved. Will your children have to change schools? What about custody concerns if you need to move out of state? While there is no simple formula here, try making a “pro” and “con” list and schedule time with your partner to discuss priorities and concerns. In addition, if you’re buying a new home together, consider how you will finance it. Will both or one of you have to sell a property in order to be able to make the purchase? Will both or one of you apply for a mortgage? Debt, employment, and child support may impact who will have the most success obtaining financing.
Deal with child support
Depending on the terms of your divorce and the laws of your state, child support issues may come up when marrying a second time. Consult your attorney and make sure that you prepare for any changes that may result from a remarriage. In particular, discuss with your partner plans to deal with situations such as you or your ex-spouse becoming unemployed, which may necessitate joint support of your children. And, make sure that your life insurance policy’s death benefit is substantial enough to cover your responsibilities, if something happens to you.
Review your beneficiaries and cover your new family
Many people buy life insurance policies when they marry or have children so that their family is covered should anything happen to them. Make sure, however, that if you’ve divorced and are about to remarry that you name the right beneficiaries on your policy. This goes for any financial product in which you can name a beneficiary, including annuities and long-term care insurance. If you have more people depending on your income, you may want to consider increasing your coverage or purchasing new policies. A New York Life Agent can help you assess your protection needs.
Organize and review your estate plan
Estate planning may become even more important when you have a blended family. Make sure that you document you and your partner’s assets before you marry, including their values at the time of marriage. Make sure your beneficiaries are up-to-date, and sit down with your attorney to ensure that your children, step-children, and new spouse will inherit what you intend, at the time you intend it.