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See a financial planner before walking the aisle again

Getting married again? Forget the wedding planner. If you're getting married and it's not your first time, the professional you most need is a financial planner.

Most people go into their first marriages with nothing. But the second time around, it's more likely the bride and groom each has children, financial assets or some combination of both. That combined with a higher divorce rate for second marriages -- 60 percent compared to 50 percent the first time around -- make it imperative the bride and groom decide ahead of time who owns what and how to handle joint finances.

The financial planner also can quarterback the legal team that helps you and your spouse-to-be draft a prenuptial agreement and new wills. But first the three of you need to sit down and talk turkey: what do you own and what do you owe?

"You have to put all of your assets on the table, face up," said Lynne Gold-Bikin, partner in charge of the family law department of Wolf, Block, Schorr & Solis-Cohen in Philadelphia. If either party hides assets, that could invalidate any agreement they make later.

"Besides, if you don't trust this person," said Gold-Bikin, "why are you getting married in the first place?"

Some things to consider:

Houses: Does either of you own a home? If so, who will live there after a divorce or the death of the owner?

If a new bride wants her husband to be able to live in the residence after her death -- but would like her kids to inherit when he dies -- she should consider leaving the home in a trust. Otherwise, the home will pass automatically to the surviving spouse and then his heirs, completely bypassing the bride's children.

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Anytime a new spouse moves into a home, the original owner risks losing it. If it's vital that you hang on to your house, you have to take steps to keep it separate from the family assets. Do not put your new spouse on the deed. Use your own money to make the mortgage payments from an account that is yours alone. Have your soon-to-be spouse waive any rights to the home in the prenuptial agreement. And don't make any major renovations or additions to the home while the two of you are living there.

Even with all of that, there is no guarantee a divorce judge will rule in your favor.

"It's a crapshoot in our legal system," said Margorie Engel, expert council to the National Stepfamily Resource Center.

Conversely, if you are sinking money into a home that belongs to your spouse, both of you should draft a notarized letter stating exactly how you expect to be reimbursed to protect your investment.

If you owned a house during your first marriage and sold or gave it to your ex, make sure he or she refinanced the mortgage.

Ten years ago, when Kathleen McNally's soon-to-be-ex bought out her share of their home, the college economics professor signed a quitclaim deed and thought that was the end of it.

But when she tried to buy another home, the bank turned her down. Since her name was still on the loan for the first house, McNally was still on the hook for the payments.

She and her lawyer had to force the almost-ex to refinance the home and take her name off the mortgage. Formerly a vice president with the National Foundation of Credit Counseling, she warns consumers that even with a lawyer, they need to be vigilant to protect their assets.

Retirement benefits: Did the first wife get 50 percent of the groom's retirement plan in their divorce? If so, the future bride needs to know that. Not only do they have to make plans for retiring with less money, but if they divorce she can only go after one-quarter of his retirement.

If retirement money isn't an issue for the bride, the husband may ask her to waive rights to his benefits, protecting his nest egg in the event of a divorce. While she can indicate her intention to do that before the marriage, the waiver is valid only if signed by a spouse -- not a fiancée. Anything signed before "I do" is worthless.

Want your new spouse to be the beneficiary on some or all of your IRAs, 401(k)s and profit sharing plans? Make sure you notify your plan administrator and sign the proper forms. If you have different ideas, make sure that you spell it out in writing with your plan administrator, have your new spouse sign off on it and include your plans in your prenup and in your will.

Insurance and investments: Who do you need to protect? Children of the first marriage? Elderly parents?

Review what you've accumulated, and decide how you want it divided should you divorce or die. If you have minor children from your first marriage, you probably need to leave your money to them -- either in trust, an annuity or through their other parent. If your children are older teens or young adults, you also have the option of leaving it to them outright.

Life insurance is designed to replace lost income. Look at how much each of you is bringing to the new household and have sufficient insurance to replace those amounts. Examine your existing policies and determine if you need to change your beneficiaries in light of your new circumstances.

If you pay alimony or child support, consider a policy that would replace that money if you died. If you receive child support and life insurance on your ex was not part of the settlement, run the numbers on getting a policy now.

Family money: Expecting a windfall through family money during the marriage? While many couples would share the money, there are other options.

Decide what you want up front, then make it happen. You might put the money into a trust, so that your new spouse could access the interest, but the principal would be passed along to your children. You can also ask the spouse to waive any rights to the money in the prenup.

A business: Most people feel as strongly about their businesses as they do about their children, says Lorayne Fiorillo, author of "Financial Fitness in 45 Days." If you want to keep yours intact, have the new spouse waive rights to it in the prenuptial agreement.

And if your spouse doesn't plan on running the business should you die suddenly, Fiorillo recommends business continuation insurance.

Debt: How much debt are you carrying? How much does your spouse have? What do both your credit histories look like? Do either of you pay alimony or child support? Are there any liens or judgments against your new partner?

"People always worry about assets," says Fiorillo. "Liabilities are more important."

Medical insurance: Do you both have medical insurance, and if so, whose policy offers better coverage?

Some companies cover kids up to age 19, while others will cover them while they are in college or into their early 20s, which might be important if either of you has teens.

College scholarships: When Margorie Engel married her second husband, her oldest daughter gained a loving stepfather -- and lost about $50,000 in college scholarships.

The federal government demands that the stepparent's salary be included on financial aid forms, even though stepparents have no legal responsibility to their stepchildren.

Luckily, Engel's new husband co-signed a loan so that her daughter could pay for college. But, 10 years later, she's still paying off the debt.

Lost money: What money do you stand to lose by remarrying?

This is especially important for women to consider. If your first marriage lasted more than 10 years but you remarry before age 60, you lose your right to collect Social Security based on your ex-spouse's earnings, which could be several hundred dollars a month during your golden years.

Some wills and trusts prevent a widowed spouse from receiving any money after remarriage. Likewise, alimony ends once you walk down the aisle again. Do the math before you say, "I do."

Spending as a couple: The No. 1 mistake most remarried couples make with finances?

"Most people's assets are not titled correctly," says Fiorillo. "Most people have things in joint names. If you want to keep it in a divorce, keep it in your own name."

But even then, experts concede, there are no guarantees.

Other things to consider: One bank account or three -- his, hers and ours? Which bills get paid from what accounts? How much do you need to save, and how much can you spend? And how should assets be titled? Sort it out before you start your new life together.

"Compare money experiences with one another and set some goals," says McNally, whose foundation counseled 1.6 million people on finances last year. "Make the decision before the marriage ceremony how the money is going to be handled."

Dana Dratch is a freelance writer living in Atlanta.

-- Updated: Jan. 30, 2007

 

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