“Happy Couples are aware of each other’s dreams and consider helping each other realize them to be one of the marriage goals.”
– “> John Gottman –
Bob came in to refinance his home to pay for his daughter’s wedding. His wife wanted him to consolidate $20,000 of her debt into the refinance as well.
Although he paid for the house in his first marriage, when he remarried, he added his new wife’s name on the title. In doing the refinance, his banker pulled the credit bureau report for both.
Bob was in for a shock. His wife had over $75,000 in unsecured debt, most of it to help her son from a previous marriage. He did not know the state of her finances.
A similar incident occurred with Harry and his wife, Carol. It was only after her death that he realized he was on the hook for over $50,000 worth of her unsecured debt from helping a dead-beat stepson over the years.
About 50% percent of first marriages, 67% of second, and 74% of third marriages end in divorce in the U.S. The financial fall out from a divorce is often huge. The fall out from a second marriage may be a lot worse.
Remarriage comes with a unique set of financial concerns.
Before any remarriage can take place, they would have been was a divorce. While marriage comes with its own distinct set of challenges, two people learning to create a life together, remarriage comes with additional challenges – the possible “baggage’ from the previous marriage. When it comes to the issue of personal finance, a remarriage comes with a financial shadow from the prior relationship. How far that shadow is cast, depends on several factors.
This shadow could include child support and alimony payments, splitting of pensions, and assets from a previous relationship. It may also include debts that accrued in the last marriage.
Many factors influence how are a couple approaches their finances in a remarriage. Whether there are children from a previous relationship, the age of the children involved.
Age & Stage
The age of the individuals would affect how they approach their finances in a remarriage.
If it is an older couple, they may each have their own established financial plan. More important than age is each person’s stage in life.
Two people may be in their forties, yet one person may have pre-schoolers while his new wife may be an empty-nester.
Someone who has already raised their children may feel reluctant to contribute to the welfare of their new partner’s young children. Or else, one person could be putting children through college while their partner is seeing their children off on their first day of pre-school.
What if the two people are at different stages in their careers?
Children from a previous relationship
The other important factor is financial commitments to a previous relationship. If the wife, in this case, has independent adult children and her husband shares custody with an ex for his pre-schoolers, he may still be on the hook for child support and even alimony payments.
The ages of your children from a previous marriage will influence how you approach your finances in your remarriage. If your children are adults, chances are you will be thinking of the legacy you’d like to leave them—more than contributing to the financial well being of your new spouse’s young children.
Financial commitments to an ex
This often comes with emotional triggers. In the honeymoon phase of a couple’s relationship, the past is still not a sore spot. But it becomes one after ten years of marriage and he is still paying alimony to his ex-wife, who may appear not to want to become self-sufficient in case she loses the alimony payments.
And what happens if each spouse has a different philosophy about helping children become financially independent? One partner may still be bailing out a forty-year-old child from his previous marriage.
Ten things to consider when thinking of remarriage.
- People who remarry when their children are adults may be well established and may want to keep their financial affairs separate from each other.
- Will you leave your assets to your biological children?
- What if you each own a home?
- Often both parties may not be at the same level of financial health when they enter a new relationship. One may enter with a great deal more assets than the other. One may be coming in with a massive debt load.
- Different parenting styles: one may believe in helping their children, even when they become adults. The other may value independence.
- Child support: one parent may be having to pay child support whereas the other may not even have had any children. Some people decide to leave their jointly-owned home to their partner upon death but leave their investments to their children.
- Wills made in previous relationships need to be updated.
- What financial obligations does your new spouse have to their previous marriage(s)?
- Are they having to give up a substantial portion of their pensions to their exes?
- Are they separated or divorced?
- If you buy a home jointly with your new spouse and you die, the house automatically transfers to him. What happens when he dies? Will the proceeds go to his children? What about your children?
There are many issues involved in remarriage. The sooner these are addressed, the better. Communication and transparency are key.
Discuss your values, goals, and hopes for yourselves and for each other. How do you want to manage your finances in alignment with these? What’s your tolerance for debt? Remarriage brings with it its own set of baggage. Financial woes can add to it, not to mention divided loyalties.
Remarriage can also be another chance to get it right!
Through one on one coaching, webinars and public speaking Jennifer helps people discover how to live life on their terms. After twenty years in banking and finance, she discovered another passion – a passion for writing. She has written numerous self-published books on money: Women and Money: 7 Principles Every Woman Needs to Know to Be Financially Prepared in Any Economy and Growing Up With Money: Raising Financially Resilient Kids in an Age of Uncertainty. Jennifer can be reached at firstname.lastname@example.org