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After three decades of marriage, Linda Ori found herself in a challenging situation when she decided to divorce, resulting in the loss of her home and shared assets. Following her remarriage seven years later, she and her new spouse made a conscious choice to manage their finances separately. They split costs for everything from mortgage payments to vacations down the middle.
Linda also takes on the financial responsibilities for her children, their spouses, and her ten grandchildren, while her husband manages similar obligations for his two children. In her estate planning, she has set up a will and trust that allocates her assets specifically to her four sons and their families, intentionally excluding her husband and his children.
Welcome to Second Marriages
“He is not in there because he has his own plans,” she reflects, indicating that this arrangement has worked well for them. The dynamics of second or third marriages often bring complex issues such as children, financial assets, and debts into play, making the blending of two lives more intricate than it might have been in younger years.
According to Tara Lawson, vice president and senior wealth strategist at U.S. Bank, establishing separate finances initially is perfectly acceptable. However, she strongly recommends having a prenuptial agreement in place before tying the knot, a piece of advice that equally applies to first marriages.
Beyond prenuptial agreements, various factors should be carefully considered before entering a subsequent marriage.
1. Assess Your Readiness for Remarriage
While love is wonderful, it’s essential to recognize that romantic feelings at 50, 60, or 70 can differ significantly from those experienced in earlier decades. Whether divorced or widowed, it’s crucial to reflect on the emotional and financial implications of remarriage on oneself and any children involved.
Marriage incorporates not just emotional bonds but also a range of legal responsibilities involving financial support for any minors, liability for household expenses, and sharing of income and assets accrued during the marriage.
2. Understand Your Divorce Decree
Your divorce decree serves as the official document confirming the end of your previous marriage, allowing for remarriage. It’s advisable to revisit this document to uncover any stipulations that might influence future marital arrangements.
For instance, spousal support outlined in a divorce decree could be a determining factor in whether to delay remarriage, as highlighted by Lawson.
3. Navigating Social Security Benefits
This aspect can be tricky and requires careful consideration, particularly from the Social Security Administration.
If you are divorced and were married for at least ten years, you might be eligible to receive a portion of your ex’s Social Security benefits, provided that your own benefits are lower. You need to be at least 62 to apply and must not have remarried before the age of 60.
Upon reaching full retirement age, you may qualify for benefits from either your ex-spouse or current spouse if their benefits exceed your own. Even if your former spouse remarries, you can still access these benefits, though remarrying before the age of 60 can impact your eligibility.
4. Recognizing the Value of Prenuptial Agreements
Prenuptial agreements are not solely for those with substantial wealth. In fact, they can serve multiple functions, not just asset distribution in case of a divorce. They can guide how finances will be managed throughout the marriage, giving you the flexibility to adapt as circumstances change.
5. Considering Postnuptials
If financial discussions felt awkward before marriage, obtaining a postnuptial agreement after the wedding might help facilitate these conversations. Similar to prenups, postnups lay out terms for sharing assets, liabilities, and support obligations. However, their enforceability varies by state and can be dismissed under certain conditions.
6. Ongoing Child Support Obligations
Child support remains the obligation of biological parents as long as the children are minors, and this responsibility does not cease upon remarriage. Generally, a new spouse’s income is not factored into child support calculations, although some states may have exceptions, such as California.
7. The Premise of Alimony
For most situations, alimony payments end when the recipient remarries. These payments are irrevocably lost, regardless of future changes in marital status. Additionally, in some jurisdictions, ongoing relationships that provide financial support, even without marriage, can lead to the reduction or elimination of alimony obligations.
8. The Critical Importance of Estate Planning
Families that include children from multiple relationships must navigate unique estate planning challenges. It’s vital to clearly articulate your wishes regarding asset distribution to ensure that all beneficiaries are taken care of, preventing unintended consequences that could arise from a lack of planning.
9. Keep Beneficiary Information Current
Lawson recounts cases where clients failed to update beneficiary information following a divorce. This oversight can lead to unintended designations, such as an ex-spouse receiving life insurance benefits. It highlights the importance of revisiting your financial documents regularly to ensure they reflect your current intentions.
10. Establishing a Healthcare Power of Attorney
It’s crucial to decide who will be responsible for making healthcare decisions during emergencies. If you prefer someone other than your spouse to serve as your healthcare power of attorney, this preference should be clearly communicated to them and your medical team.
This content originally appeared in the Kiplinger Retirement Report, a monthly publication addressing the financial concerns faced by affluent seniors and pre-retirees.
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