Getting married is a very special time in your life. If you’ve been married before you’ll remember the excitement leading up to the big day.
Marrying a second time should be treated with some trepidation. As much as it is an emotional experience, it’s also important to let your head rule your heart – especially when it comes to matters of finance. Getting remarried opens a Pandora’s box of financial issues that really need to be considered before your big day, to ensure your new bond stands the test of time. Here’s our advice on what you should discuss with your soon-to-be spouse:
Decide how you will divide income: If you’ve lived on your own for a while you’ll be used to making decisions independently. If your new spouse is to move into your home (or vice versa) you now must consider how you’ll live with another person. Will you have your own separate spending accounts, or keep everything jointly? Will incomes be shared and, if not, who will be responsible for paying what bills? What about savings? Will you have a household budget? These are all important matters to discuss.
Look at tax implications: There may be tax implications to entering into a married, cohabitating relationship which could be a plus or minus. Being together could provide an opportunity to redistribute taxable income if one of you is a business owner. Financial strategies for how to make the most of your new status should be discussed with a financial adviser or accountant.
Consider your assets: You will, no doubt, bring some assets of your own into the new relationship. What will happen with these assets should you die? Are there children from your previous relationship that you will want to provide for?
What happens financially if you split up: No one plans for a relationship to end but having been through one marriage breakdown before, you likely have a good understanding of how important it is to be smart about this. You need to determine how things should be divided if the relationship should end. The last thing you want is to be worse off financially than what you were when you entered the relationship. If you have wealth you wish to protect, you may wish to consider a pre-nuptial agreement for the sake of both parties. You should discuss this with a financial adviser or family lawyer.
Review your life insurance: If you have an existing life insurance policy in place then you need to review your beneficiaries, and update it if you wish to include your new spouse. Does the policy provide enough for loved ones if you die? Are you undertaking any new financial obligations, such as a new mortgage, that you would like your life insurance to provide repayment for should you pass away? Does your new spouse have life insurance?
Revise wills, power of attorney, and enduring guardianships: You will most likely need to update these documents to reflect your new situation, redistribution of wealth, or funeral instructions. Make sure your wishes are reflected properly so you have peace of mind should anything go wrong.
What obligations are there to former partners: This is important to discuss as it can influence future plans or leave you open to risk. If you or your new spouse have ongoing responsibilities to previous partners (e.g. child maintenance), you need to review your obligations and how they will impact your relationship moving forward.
What is your partners credit history: If the two of you are considering applying for a loan in the future, your spouse’s credit history will be an important consideration. You may not necessarily be responsible for any debts they have, but their history may hinder your plans, and any debts they are repaying will affect your income and lifestyle.
Consider any bequeaths: Have you thought about any future benefits you could receive (i.e. inheritance from the death of a parent). It’s likely your new spouse will have some claim to this, especially if you separate. Again, it’s a good idea to consult a financial adviser or family lawyer about this, including what steps can be taken if you wish to keep these benefits to yourself.
Will you lose any entitlements if you remarry: Some pensions, payouts or government entitlements you currently receive may be revoked or reduced in the event of remarriage. You will need to take this into consideration.
How’s the health: Do you and your new spouse have health insurance? Are you looking after your health? What financial responsibilities will you and your spouse face in the event of a decline in health?
These financial factors need to be considered when embarking on a new marriage. Even if you have recently remarried you can still take steps to deal with most of these issues after the event. Good planning and communication with your partner should go a long way to protecting each of you and ensuring there are no misunderstandings in the future.
If you’re trying to identify ways to mitigate risk and protect your wealth/estate, you don’t need to do it alone. A financial adviser (or planner) spends their days identifying and presenting opportunities to their clients. Our simple, quick, free service will connect you to the best independent financial advisers, based on your needs. Click here to get started.
The information in this article is general in nature and does not take into consideration your personal situation or circumstances. You should consider whether the information contained in this article is suitable to your needs and where appropriate, seek professional advice from a financial adviser or other finance professional.