See a financial planner before walking the aisle
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
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.
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
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
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.
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
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
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.
When Margorie Engel married her second husband, her oldest daughter
gained a loving stepfather -- and lost about $50,000 in college
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
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,