Finding a new life partner the second time around can bring a lot of opportunity for new beginnings, but it also brings challenges. How will the children be affected? Where will you live? How will you share responsibilities? These are some of the issues that you may need to deal with.
Financial aspects of your relationship can also present some hurdles to overcome. Here are some key financial issues you might want to consider if you are looking to tie the knot again.
How Will you Handle Daily Finances?
There are many things to consider when joining up your finances – especially where children and stepchildren are involved. Decisions need to be made about whether you keep separate bank accounts or join them together. Then there are practicalities about how expenses relating to dependent children will be managed – this can get quite tricky if some are costing more than others.
Different attitudes to spending and budgeting can also be another issue that doesn’t arise until after you are already living together. Some people like to be very structured and frugal, while others might be more carefree with their spending. Decisions also need to be made on who will take responsibility for managing household expenses.
Existing debts and mortgages will also need to be dealt with, so that both parties agree on who is responsible for what.
What are Your Long Term Financial Goals?
Assuming you decide to blend your finances to at least some degree, there may be many longer term financial issues that need attention. Investment assets are an area where decisions need to be made for long term harmony. What assets do you both already have and how will ownership and decision-making be shared? What are your attitudes towards investing and how do you plan to save for retirement?
A financial planner can play a key role to help you work through such issues. They can help give you clarity and confidence in making decisions that will set you up for a future that is both prosperous and agreeable to all parties.
Do you Need a Prenuptial Agreement?
If your situation is complex, then it may be useful to put expectations and guidelines down in writing via a prenuptial agreement. These are otherwise known as a binding financial agreement (BFA) and can be an excellent way to ease concerns over ownership and sharing of responsibilities, especially in the case of a future breakdown in the relationship. It is essential to seek professional advice on how such an agreement will work and both parties must sign up to it in order to make it valid and binding.
Estate Planning can be a Minefield
Did you know that a second marriage automatically revokes the provisions of an existing Will? This means that setting up new Wills and estate plan is of paramount importance when you remarry.
Blended families automatically create the potential for major conflict over finances. If you or your partner dies suddenly how funds are shared between children can be problematic, so it may be worthwhile setting up testamentary trusts to protect your estate assets and help manage distribution to children smoothly and fairly.
Again, professional advice is critical to getting on top of this situation and avoiding pitfalls of poorly documented estate plans.
Superannuation and how benefits are paid out is another significant matter to attend to, due to the very specific rules that apply to the distribution of super benefits. Speak to a financial planner to obtain a review of your benefit nominations and how they will be impacted by the second marriage.
Bridges Financial Services Pty Ltd (Bridges). ABN 60 003 474 977. ASX Participant. AFSL 240837. This is general advice only and has been prepared without taking into account your particular objectives, financial situation and needs. Before making an investment decision based on this information, you should assess your own circumstances or consult a financial planner or a registered tax agent. Examples are illustrative only and are subject to the assumptions and qualifications disclosed. Part of the IOOF group. In referring customers to Bridges, Southern Cross Credit Union Ltd. does not accept responsibility for any acts, omissions or advice of Bridges and its authorised representatives.