It is important to have estate planning, family and finances discussions before getting married. When it comes to addressing financial issues in a remarriage, couples should look at the past. This should include the way in which each person handled finances, and their pre-marital liabilities and assets, along with the present (e.g., new benefit options) and the future. They should discuss how they’ll handle finances as a unit or protect themselves and loved ones in case of death or divorce.
CNBC’s article entitled “Remarrying? Here are financial considerations to keep in mind before saying ‘I do’” says that it’s important to release any financial skeletons from the closet. Here are some smart financial topics for new fiances:
It’s critical that blended families have similar talks with their children. The children were most likely brought up in different financial circumstances, so it’s important to talk as a family about new financial expectations.
After the prospective spouses identify their collective financial situation, there are a few topics to consider. For instance, if you were previously married for more than 10 years and collecting Social Security benefits on your ex-spouse’s account, you may forfeit those payments if you remarry. Your new combined income may also result in a higher income tax bill.
Moreover, financial discussions and communication is a crucial best practice to achieve financial success in a relationship. After you remarry, look at the impact on benefits either or both of you may be entitled to or losing due to the marriage.
Marriage is a recognized life event, so you may be allowed to change your health insurance options outside the regular autumn time window.
Marriage will also subject all of the couples assets to long term care and Medicaid eligibility issues in many states, so be sure to understand the consequences if it is anticipated either of you will need care in the future. Prenuptial agreements will not always offer you and your spouse the protection you think when elder law issues arise.
You should also be aware that if you were previously divorced and getting substantially discounted insurance via the healthcare.gov exchange, when you remarry, your insurance costs may go up if your joint income goes up.
It’s also smart to consider protecting pre-marital assets that were in your name only. You should consult an experienced estate planning attorney prior to marriage. They may advise against commingling some or all assets, and suggest a trust, segregating pre-marital assets from marital assets, and entering into a prenuptial agreement to protect you in the event of divorce.
Estate planning discussions are vitally important if you have a new family with children. These are the documents that will take care of the people you love and ensure that your estate will transfer to the people you want.
Don't forget to have these important discussions about estate planning, finances, and family to be sure you are on the same page before it's too late.
Reference: CNBC (March 7, 2022) “Remarrying? Here are financial considerations to keep in mind before saying ‘I do’”