Smartest Money Moves at Any Age
From first job to retirement, we tell you how to manage a dozen events that can change your life.
From Kiplinger's Personal Finance magazine, July 2005
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Love is complicated the second time around
Carolyn Curtis's first marriage -- to a financial planner, no less -- ended not only in divorce but also in financial distress. So when she married for the second time, to Charles Stolzenbach, she knew she had to tread warily -- especially because she and Stolzenbach are marriage and family counselors in Sacramento, Cal.
Nevertheless, the couple decided to combine their assets. "Each of us had about the same net worth," says Curtis. "So instead of quibbling over small amounts, we decided to put everything into one pot."
Curtis says it was a "monumental decision" -- and not one that every remarried couple will want to make, especially because, at this stage of their lives, each of them may bring substantial assets to the relationship.
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If you choose to keep even some of your property separate, consider drafting a prenuptial agreement. There's nothing romantic about a prenup. Much like a divorce, it's usually best if each of you hires your own lawyer. But a prenup brings differences into the open and helps resolve them. Or, in the worst of all worlds, it can make divorce less complicated.
Another sticky issue for blended families is how to decide who inherits what. Do you leave your assets to your new spouse or to your children by a previous marriage? When they married, Curtis had one child and Stolzenbach had three. Yet they decided to divide their money equally among all four children. "I asked my son how he felt about that, and he said it would be fine," says Curtis.
It's also critical for remarried couples to reconsider guardians and trustees for minor children, and to update life-insurance policies, health coverage, powers of attorney and medical directives. "You probably don't want your ex deciding whether to pull the plug if you're incapacitated," says Celia Patch, a financial planner in San Francisco.
Whatever decisions you make, be sure to follow through and change outdated beneficiary designations on life-insurance policies, profit-sharing plans and IRAs. When Patch's father died 13 years ago, he and her mother had already been divorced for more than 20 years. Yet when Patch was going through his papers, she found a 40-year-old life-insurance policy payable to her mother. "It was nice for Mom," says Patch, "but I don't think it was what Dad intended." -- Steven T. Goldberg
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