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It’s a fact that for different reasons – namely divorce or death of a spouse – some marriages end. It’s also fact that some folks want to give marriage another shot, meaning advisors probably already have clients that are on their second (maybe more) marriage.
Second marriages can take on a variety of forms. Baby boomers who have lost a spouse may indulge tying the knot again, a move that brings with it some financial complexities and the need for advisor involvement. On the other hand, some younger people that have gone through divorce may have met someone new and want to give marriage another try. Plenty of those clients are likely to have children and the blending of two families introduces a slew of financial issues confirming that advisors are needed.
Point is the “typical” marriage is hard to find these days and the complexion of the American family has changed dramatically over the years. Those scenarios create increased need for quality professional advice confirming that if clients have broached the subject yet, advisors should inquire about second marriages and come ready with sound game plans.
Fresh Starts Meet Complexities
A second marriage represents a fresh start – undoubtedly positive – but there are issues that need to be addressed, preferably prior to saying “I do.” Being proactive is all the more important when two people are blending families.
“Second marriages can come with a number of complexities,” says Shannon Baustian, Private Wealth Advisor with U.S. Bank. “Child support obligations, spousal maintenance obligations—those all may be in place for one party or another. And often, people are coming into the relationship with separate property or maybe even separate businesses.”
Second marriages demand discussions on myriad issues ranging from estate planning to real estate to retirement planning and, for better or worse, debts that are being brought into the new marriage. That means being proactive and transparent are likely to be rewarded as is working with an advisor before the second marriage even starts.
“Take the time to review your income, assets and debts, outlining what you will bring to this new marriage and any financial obligations you may have to a previous spouse or children,” notes U.S. Bank. “Couples should plan on being transparent and open in these conversations, which will lay the groundwork for a solid financial partnership.”
Setting the Table Prior to Marriage
Obviously, a second marriage isn’t a “first rodeo” for the involved parties, but love is a powerful emotion and that newfound bliss can make it easy for couples to ignore some important financial conversations and tasks. Advisors should encourage second marriage couples to be proactive on this front and address issues such as how will pre-marriage debts be handled and who’s paying for whose kids’ college educations.
Then there’s the big issue of whether or not the new spouses should consider merging their finances. It’s likely most couples will have partial mergers while keeping some accounts separate. Advisors should help these clients understand the pros and cons of full financial consolidation and the opposite scenario.
“Maintaining separate accounts might make it harder to manage shared finances, but it does offer a level of financial independence that some people prefer,” concludes U.S. Bank. “Especially when it comes to combining finances for a second marriage, Baustian notes that having a joint account while also maintaining individual accounts can offer the best of both worlds and allow people to maintain a level of financial independence.”
Related: How Lincoln Financial Group Annuities Can Help With the Cash Conundrum