Divorce can be devastating at any stage in life, but it can be disastrous for those who fail to prepare. There are complications that come with second and third marriages – ex spouses, stepchildren and retirement savings. More importantly the divorce rate for second marriages is over 60%. Many issues exist for previously divorced couples who remarry and together form blended families. In addition, there are assets and property that come with both parties into the new relationship that may need to be reserved for the use of their specific children, e.g., college fund accounts. Due to these complications, financial planners and attorneys have developed some helpful tips for those who decide to remarry.
First, openly discuss both of your finances. Be honest with your new spouse about any debt you have previously acquired. Let them know how much of your money is going to bills and how much you plan to give to your children.
Second, both partners need to review each other’s credit reports. You need to be completely honest about where each person stands financially. Finances are the number one reason people get divorced, be it first, second or third marriages. By disclosing this information, your new spouse can see how well you have paid your bills in the past, thereby foreshadowing how you may pay bills in the future. If there is a lot of debt or delinquency on the report, you and your new spouse can discuss actions for future improvement.
Third, remember to change your beneficiaries. Many people do not understand that beneficiaries are more binding than a will. Even if you state in your will where your money should go, be sure to change your beneficiaries as well. If you want your children to receive assets, make sure you update that benefit designation.
Fourth, consider a prenuptial agreement. Without one, upon death, state law will give the surviving spouse extensive rights to the estate. The issue of prenup can sometimes be awkward or uncomfortable, so blame the evil attorney who advised this legal action.
Fifth, before you add your new partner’s name to your home, consider the consequences. The advice here is to keep your house under your name and merely allow your new spouse occupancy. Under Georgia law, any transfer to joint names is deemed as prima facie evidence that the transfer was intended as a gift. This could destroy any right to premarital interests and separate property in the event of a future divorce.
Finally it is always important to consult with an attorney (family law, tax, probate) and financial professionals (accountants, financial planners, etc.) for any thought of remarriage which will definitely impact the future of both parties, their new and old families and their extended families. A little preparation saves money and, more importantly, stress in the future.
Adapted from USA Today, May 21, 2014, Rodney Brooks.
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Disclaimer: The information posted here may not be up-to-date. It is provided strictly for your convenience only. We do not guarantee the accuracy of this information and it should not be considered legal advice.