If you’ve decided to remarry, talking about financial matters might not be high on your to-do list. In fact, it might make you feel downright uncomfortable. But those important conversations could help prevent unpleasant surprises down the road.
“You should talk about money before the wedding bells ring,” says Tracy Green, Planning & Life Events Specialist for Wells Fargo Advisors. “Your accounts, your budget, your estate plans—these are all things you need to discuss.”
Here, Green and John F. Padberg, Wells Fargo Advisors Planning & Life Events Specialist, share their perspectives on what couples getting married again should discuss before living under the same roof.
Share details about your debt and credit
You and your partner should discuss details about your mortgages, credit card balances, and any pending or prior claims against you. Also, share details about any current alimony or child support obligations.
Both partners should consider maintaining individual credit as well as combining credit to provide flexibility, Green says. “We suggest each person run a credit report at least once a year to review your credit score and to keep an eye out for suspicious activities due to identity theft,” she says. “If there are any surprises on the report, you should contact the credit agencies as soon as possible to get them straightened out. Knowing each other’s credit history may help determine if applying for joint credit makes sense or not on any new purchases.”
Consider your beneficiary—and trustee—designations
Before you remarry, be sure to review the beneficiaries on all of your accounts, including your life insurance policies, 401(k)s, and IRAs. Green has seen these assets mistakenly go to ex-wives and ex-husbands because the beneficiaries were never changed after a second marriage.
At the same time, think about who might administer trust planning for your children, Padberg says. “With a blended family, you may want to have a professional trustee—an objective third party—administer trusts for your beneficiaries to help keep the family harmony.”
Talk through how you’ll pass along your assets
When families blend, financial control—especially around estate planning—can become an important issue, Padberg says. “You realize if you leave everything outright to your new spouse, your own kids may be left out as beneficiaries when that surviving spouse dies,” he says. The new spouse may be significantly older or younger, and have children in a different age range as well. “You might think, ‘If I die and leave assets to support my younger spouse for life, my own kids could have to wait a long time before they receive any assets,’” he says. “So planning for when the kids receive inheritances becomes more significant, too.”
To retain more control, he recommends talking with your estate planning attorney about vehicles such as a qualified terminable interest property (QTIP) marital trust. “It simply says you’re going to provide for the surviving spouse for life, but at their death, the assets in that trust will go to the first spouse’s children,” Padberg says.
To help work through all these topics with your spouse-to-be, consult your financial advisor, tax advisor, and estate-planning attorney, Green says. “Create a team with all three so everybody is on the same page.”
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