Are you planning to remarry? Saying, “I do” for the second can be a complicated venture when you are merging households. The longer you and your Intended have lived, the more opportunities each of you have had to accumulate property and debt. Before you make it legal, a visit to your financial advisor is in order so that you can discuss your finances and your plans for your life together.
Planning to Remarry: Discuss your Finances First
Going into a second marriage may mean being older and wiser, but not everyone sees it that way. Some people repeat the same patterns with money in subsequent relationships that they did the first time around. Before you make a commitment to your partner, you need to have that money conversation first.
Merge Your Lives and Your Finances
What happens if you are a spender and are carrying a heck of a lot of debt and your soon-to-be spouse is an avid saver and has built up a substantial net worth? What if you earn a lot more money than your spouse or have more financial responsibilities? Are you both in agreement when entering this new union that you will split all debt, assets and income 50/50? Or will it be, what’s yours is yours and theirs is theirs? It is extremely important that you and your spouse are both on the same page about your expectations or assumptions regarding your financial house. I highly recommend that you both have a conversation with your own financial advisor and a lawyer beforehand to get independent advice on protecting what you have built for yourself up to this point in life.
Discuss your Financial Goals
You may have always dreamed of retiring at 60 and traveling the world; however, your soon-to-be-spouse lives and spends for the moment. Do you keep your independence and plan and save for the retirement that you want or do you both come to some type of agreement on how to spend those Golden Years and contribute equally to the savings pool? Being out of alignment with each other on important financial goals can lead to a lot of friction in a marriage. Avoid future arguments and built-up resentment by discussing your short and long term financial goals and plans to achieve them early on in the relationship.
Making Your New Spouse the Beneficiary of your Assets
If you have an RRSP, TFSA, life insurance policies and a pension plan, you have assets that require a named beneficiary. Before deciding to add your new spouse as the beneficiary it’s a good idea to talk with your partner first to make sure you are both on the same page and if they have assets requiring a beneficiary they in turn will be naming you. Since you have been married before, you also need to be sure that your former spouse does not have a claim to any of your assets. In addition, if you have children from a previous marriage you may prefer to have your assets go to them. It might not be the most tax efficient way to pass on your estate but many couples prefer this strategy at least for the first few years of their new union. If you have young children who are still financially dependent, you may legally have to earmark assets to financially provide for them you should die prematurely. It’s a good idea to seek advice from your financial advisor and your lawyer before making any changes.
Documents You Will Need to Update on Remarriage
Your Will and Power of Attorney
Both of these documents will need to be updated when you get married. Make an appointment to see an attorney before the wedding to prepare updated documents in anticipation of your new marriage.
Registered Retirement Savings Plan (RRSP) Beneficiary
You may need to update the beneficiary on your RRSP after your marriage. There are tax benefits to rolling your RRSP to a surviving spouse on your death, since the funds will transfer on a tax-free basis.
Pension Plan Beneficiary
Consider changing the beneficiary on your company pension plan to your new spouse after the wedding. This step is especially important if your plan has a survivor benefit.
Life and Health Insurance Policy Beneficiaries
You may also want to change the beneficiary on all life and health insurance plans, both privately held and through your employer, to your new spouse. (In the case of life insurance coverage, you may wish to designate your children as alternate beneficiaries in case you and your spouse die together.)
Before walking down the aisle, have the all-important money conversation with your spouse-to-be. Second marriage survival rates are lower than first marriages because the issues are much more complex.
