One of the things I’ve thought a lot about recently is what happens with your finances when you marry for a second (or third) time. Deciding whether to combine finances in a first marriage — and how you will do it — can be complicated enough. Money during a divorce can be a complex subject as well. But what happens if you get married again? You need to have the conversation about whether and how to combine finances all over again.
New Factors to Consider
Things can be a lot more complicated when you embark on a second marriage in many cases. There are often kids involved, and other financial encumbrances to worry about. If there are spousal support or child support payments involved, it could change the way you manage your money.
Not only that, but you need to figure out how much you will pay for gifts, and how often they will be sent. If your new partner has a different idea of how to manage money, or how much help to give to children and possibly parents, you will need to work that out before combining finances.
Don’t forget that you also need to consider the beneficiaries of your various accounts. Will you change life insurance, retirement accounts, and other items to reflect the new partner? Or does it make more sense to list your children as the beneficiaries? While I’m not planning on remarrying anytime soon (or even ever, perhaps), I’ve still thought about this quite a bit, and I’m inclined to just keep my son as the beneficiary of my accounts, no matter what happens.
Combine Household Expenses
One of the more common arrangements I see amongst couples in second marriages, and even amongst those in first marriages, is the idea of combining household expenses, but keeping other aspects of the finances separate.
A couple might open a joint bank account together and each put in a set amount each month to cover household expenses. In some cases, both partners put in half the amount needed, splitting the costs down the middle. In other cases, I’ve seen each contribute the same percentage of income.
With the shared expenses covered, each person can use his or her money as preferred. In second marriages, this might mean spending money how you want on your own children. It can also mean that support you pay doesn’t impact your new partner’s bank account.
This method can also help keep assets separate in the event that you divorce, or that you die. This can be one deciding factor if you want your children to be the main beneficiaries, and not your new partner. If everything’s combined, your partner might not be willing to provide for your children the way you want to.
Marrying a new partner can be a tempting move. However, you need to consider the consequences of the decision. While putting everything in both your names can make things easier in some respects, it also means that your new partner might have complete say over what happens to those assets if you pass on. If your priority is taking care of your children, it’s vital that you make sure your legacy is set up for that before you start combining finances in a new marriage.