What to Do Before Saying “I Do” Again
A second (or third) marriage isn’t just a new chance at love – it’s an excellent opportunity to review and refresh your financial situation. Having open conversations about your financial status upfront can clarify expectations and reduce any outstanding questions in the future.
Savant’s newlywed checklist has several items that hold up for second marriages, including creating a monthly budget and an emergency savings fund. Overall, keep in mind that organizing your financial life will help you build a solid foundation that can help you for years to come.
First: Make a To-Do List
While wedding planning may be more fun than financial planning, remember that you and your partner will be well-served to put together a list of all individual assets and share those with each other. These can include any outstanding debt, alimony, or child support, and if your or your partner’s ex-spouse has any claim to current assets or future retirement plan earnings. Sharing this information may help inform what, if any, assets you should combine down the road.
Next on the to-do list is updating your insurance coverage and beneficiaries, estate plan, and your will. You may want to consider extending your life insurance coverage if your situation calls for it. Purchasing long-term care insurance is another option because nursing home and home health care can be extremely expensive. Opting into this coverage may help ease future healthcare-related financial burdens.
Finally, as you merge families, know exactly who will receive your assets and update your beneficiaries as needed. As Savant’s Dominick Parillo writes, getting married is the perfect time to update your estate plan, and this is true especially if you’ll be moving to a new state after marrying. While your documents will be recognized in another state, having local forms will protect against unnecessary delays.
With a potentially larger family, you may want to update your estate plan and reconfirm who will act as financial and healthcare powers of attorney and executor of your will. You should also consider assigning backups in case your primary choice cannot complete these duties.
Second: Consider Your Options
Now that you and your partner are up to date on each other’s financial states, what, if any, assets do you want to share? Or do you prefer to keep them separate? You may be getting ready to enter your marriage with decades of assets in your name. In that case, it makes sense to sit down with your partner to divide assets into a “yours, mine, and ours” list. This generally means that any assets you had before the marriage are considered yours alone.
Then, you and your spouse can open a joint account that will go toward monthly bills and shared expenses. Be sure to discuss how much you both will contribute. If you and your spouse make similar salaries, should you contribute the same? Or if one partner makes more, how would you split the contributions?
Finally, you may want to consider a prenuptial agreement or prenup. They don’t sound very romantic, but the agreement is an effective preparation strategy that can protect you in case the marriage doesn’t work out. A prenup is a legal agreement that parties sign before they are married. Its primary purpose is to set forth the spousal support and/or division of property in the event of divorce or death. Without a prenup, the laws of the state will determine how marital property is divided at divorce.
Third: Make a Detailed Plan and Act on It
You may have experienced major changes since your last marriage, including children becoming adults, parents requiring more assistance, and a portfolio that’s much more diverse. Having your financials, beneficiaries, and will in order before walking down the aisle again can save a lot of work – and possibly heartache – down the road.
At Savant, we work with families to safeguard their financial future by creating a thorough plan of action. If you are looking to build a family legacy or would like a second opinion, we invite you to schedule an introductory call with a member of our advisory team.