Financial Considerations when Remarrying image

Ready for (Re)marriage?

Published: July 16, 2021

Ah, summertime, the heart of what is commonly regarded as “wedding season.” This year, most in the industry expect an even busier summer for nuptials, as many couples originally scheduled to get hitched in 2020, postponed those plans due to COVID-19. As always, some of those happy couples likely will include individuals who have been married before. According to the Pew Research Center, among married adults, about 23% have been married once before. Remarriage, particularly for those with significant assets, can introduce a host of unique complications and considerations. Fortunately, advanced thought and planning can help to avoid potential problems. Some common areas we often consult with clients on are:

The money talk. Everyone has a different approach to money, financial organization, and spending. If you believe in strict budgeting and modest living, you may foresee conflicts with a future spouse that likes to spend more freely. You should discuss how to make that work once you are married. This will help you understand each other’s mindset and plan for compromises that work for both of you.

Be an open book. Both you and your future spouse deserve to know each other’s financial information, starting with sources and amount of income. You should also share details about retirement and non-retirement assets, such as bank, brokerage, college savings plans, and investment accounts. You should also be forthright about your liabilities, which could be short term like credit card bills, or longer-term obligations, such as a loan, mortgage, alimony/child support, or other regular payments. 

To prenup or not to prenup? A prenuptial agreement may seem like the most unromantic of actions. But the process can help clear the air, and set a couple down a path of mutual understanding of their financial future. Although no one hopes or expects to need that document in the future, a prenuptial agreement can be even more important to explore when entering a second marriage. According to U.S. Census data, second and third marriages are statistically less likely to succeed than first marriages. One of the reasons often cited by marriage experts is finances. A prenuptial agreement is a legal contract that details each party’s assets and liabilities and defines what will merge, and what will stay separate property, once the couple is married. Although it may be a difficult topic to bring up, in our experience, the benefits outweigh the concerns, and tackling it sooner rather than later can avoid stress right before the big day.

Bills, bills, bills. Dealing with everyday finances can be an area of contention for even the strongest of relationships. You can set up a joint account, contributing a set amount each month, or you may choose to maintain separate accounts, dividing up who pays for what. The percentage that each person pays might be split equally or unequally depending on each person’s ability to contribute. There are also non-everyday expenses, such as children’s schooling, charitable contributions, and major purchases. Developing your expense strategy ahead of time can ease the stress of starting your new life together.

Look to the future. Marriage, in addition to being a celebration and a milestone, can also be a good opportunity to make sure your intentions for different situations are honored. Your will may need updating, especially if you have children from your prior marriage for whom you wish to leave a legacy. This new financial planning may involve a trust to provide for your spouse while still passing on the assets in the trust to your children when you and your spouse are both gone. Other items to consider are financial accounts, healthcare powers of attorney, insurance policies, real estate, art, or other real assets that you may wish to share with your partner. Your advisor can help you identify items that need to be reviewed.    


Important Disclosures

This material is provided for informational or educational purposes only and should not be construed as investment, accounting, tax or legal advice. Always consult a financial, tax and/or legal professional regarding your specific situation. This communication is not intended as a recommendation or as investment advice of any kind. It is not provided in a fiduciary capacity and may not be relied upon for or in connection with the making of investment decisions. Nothing herein constitutes or should be construed as an offering of advisory services or an offer to sell or a solicitation to buy any securities or a recommendation to invest in any specific investment strategy. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future returns. The views expressed herein are as of a particular point in time and are subject to change without notice. The information and opinions presented herein are general in nature and have been obtained from, or are based on, sources believed by Klingenstein Fields Advisors (“KF Advisors’) to be reliable, but KF Advisors makes no representation as to their accuracy or completeness. Although the information provided is carefully reviewed, KF Advisors cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided. KF Advisors represents two investment advisers registered with the Securities and Exchange Commission: Klingenstein, Fields & Co., L.P. and KF Group, LP. If you are a KF Advisors client, please remember that it remains your responsibility to advise KF Advisors, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.