retirement

Getting Remarried? 5 Financial Steps to Take Before Tying the Knot (Again)

The stakes can be higher for a second marriage, because you probably have built a more established career, have amassed more assets and possibly some children as well. So be prepared before you set foot down that aisle.

Getting remarried gives people a fresh start, an opportunity to learn from the past and to move forward. Unfortunately, for most couples, the next trip down the aisle can also come with a host of new financial challenges.

While certain conversations can wait until after the big day, it’s best to sort out your financial plans before saying “I do” again. Here are a few financial steps you should consider before getting remarried.

Put together a consolidated net worth statement

Many couples never look at their combined net worth until they start talking about how they will pay for their wedding or another big purchase comes up for which they have not deliberately prepared. And couples who marry again often have more complex financial responsibilities — like child support, liquid and illiquid investment assets, estate-planning and tax-planning strategies.

Regardless of the specifics of the situation, it’s best to put all your cards on the table at the beginning to avoid damaging your relationship in the long run. Take time to review your individual financial situations, including liabilities, before you pull together a consolidated statement of net worth.

This process also opens up a larger discussion about how you’d like your money managed as a married couple. Would you prefer to tackle everything jointly, or would you like to keep some things separate? How do you want to spend your retirement, now that it’s closer, and you have a better sense of what you’ll have saved? What about investment risk tolerance? If assets will be combined, how aggressive is too aggressive for one spouse vs. the other? These are important questions to answer before the wedding takes place.

Have a pre or postnuptial agreement drafted

Having conversations about pre and postnuptial arrangements can sometimes be uncomfortable, but they can be valuable for both parties in the event of a divorce. And if you’re getting remarried, having a pre or postnuptial agreement is especially important because it’s the only way to legally claim specific assets within a marriage. At a time in your life when much more is at stake, shoving the paperwork aside to avoid a difficult conversation isn’t the best course of action. Plus, having a prenuptial agreement in place may ensure any children within the marriage are financially protected in the event one spouse dies.

Also, it’s important to remember, even if you’re recently married and don’t have a formal prenuptial agreement, the laws of the state often have one for you.

Decide how children factor in

Some spouses who were previously married may bring children into their new relationship, opening up a range of financial complications. Rarely do we find that couples can claim true equity when bringing children into the mix, and with child care and education costs being higher than ever, it’s important to know where you stand.

Decide as a couple how you will financially handle major expenses, like health care, child care and tuition fees. The decision of whether to split these expenses will be vastly different from couple to couple. For instance, if only one spouse brings children into the marriage, does it make sense for both spouses to pay for their upbringing? What if the spouse who does not have children makes significantly more money than the other? How do you handle that? The best solution is to speak openly with your partner about your concerns. Once you’ve decided how you’d like to move forward, discuss your plan of action with a financial adviser to ensure you’re considering all potential options, and their long-term implications.

Update beneficiary designations on life insurance and retirement accounts

This is something that should be completed before any marriage, but people often forget to update these documents the next time around. As a single person, most people have a sibling or a parent listed as their beneficiaries on life insurance and retirement accounts, then add their spouse once they get married. Unfortunately, if beneficiaries are not updated before or immediately after the next marriage, and one spouse passes away, the first spouse (or whomever is listed as a beneficiary at the time of death) will receive the payout.

Assuming you’d like to list your new spouse as a beneficiary, you should review all of your accounts, and update the appropriate documents. You may also consider purchasing additional life insurance with your spouse to bridge any asset or income disparities.

Update all legal documents, including wills, powers of attorney and health care directives

Much like your insurance and retirement accounts, legal documents are often left untouched until the unthinkable happens. Meet with an attorney to review your situation and update or create wills, powers of attorney and health care directives to ensure your new spouse, or another appropriate party, has the decision-making authority that reflects your intentions.

About the Author

Matthew Helfrich, CFP

Partner and President, Waldron Private Wealth

Matt Helfrich is President of Waldron Private Wealth, a boutique wealth management firm located just outside Pittsburgh, Pa. He leads Waldron's strategic vision, brand and value proposition and overall culture of the firm. Since 2002, Helfrich has served in a number of roles including: Chief Investment Strategist and Chief Investment Officer, where he was instrumental in creating and refining Waldron's investment discipline.

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