Wills

5 Top Financial Things To Do For A Second Marriage

1.  Full Disclosure Before you get married, you and your fiancé should discuss all aspects of your financial situations with one another. On a piece of paper, write down your: Credit History. Have you ever been late on payments, or had any judgments against you? Have you ever declared bankruptcy? Debts. How much do you owe to credit cards? What other debts do you owe? Assets. Include your annual earnings, the value of your home, cars, investments, and retirement plan funds. Obligations under a previous divorce decree. Make sure your intended is aware of any child support or alimony payments you are required to make (including how much), as well as any disability, life, health or long-term care insurance that your settlement says you must keep in effect. You should also let your partner know if your ex-spouse has rights to any of your future retirement plan earnings. When you’re done, exchange papers with your fiancé. Expect your answers to trigger discussion about who is responsible for debts incurred before the marriage, whether you will share assets earned by one of you, and how you will meet financial obligations from a previous marriage. Your next step is to consider drafting a prenuptial agreement. A “prenup” is especially important if you 1) are bringing significant assets into the marriage, 2) expect to inherit a business or other assets in the future, or 3) have children from a previous marriage. 2.  Protecting Your Assets Typically, those who remarry are older and wealthier than the first time they married. As such, you often have more interest in protecting assets you bring to the marriage. Many high-earners also are interested in protecting assets they’ll earn during the marriage. A prenuptial agreement will ensure that your assets will remain separate from your spouse’s, and that the spouse cannot claim a portion of your assets if you divorce. 3.  Protect Your Children Prenuptial agreements also can be useful if you have children from a prior marriage and want to ensure that your assets pass to them when you die. Generally, unless your spouse specifically waives his or her right to the assets in a valid agreement, he or she may claim a portion of your estate when you die. Take John, for instance. A successful internist, he was 45 years old when he married his second wife, Melanie. To protect his two children from a previous marriage, John established a trust and named the children as beneficiaries. That way, the $2 million in assets he’d earned before his second marriage would go to the children when he died and not to Melanie. But John’s plan may be sabotaged if Melanie decides to sue for a share of the money when he dies. Virtually every state has a law that entitles a surviving spouse to a portion of the estate — even if your will or a trust says otherwise. If Melanie does not expressly waive her right to the money in a prenuptial agreement, John’s children could lose a third of their inheritance should she demand part of the money. If you’re like most, however, you […]