Should You Combine Finances in a Second Marriage?

by Miranda Marquit · 8 comments

married couple
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 in the mix, it could change the way you manage your money even more.

That’s not all. 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 while 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 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. Having these two big topics be a non-issue can make all the difference.

This method can also help keep assets separate in the event of a divorce or if one of the spouse dies. 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. The money you’ve worked hard to accumulate could even end up benefiting people you’ve never met if your spouse happens to re-marry yet again. This could seem like a script from some far fetched movie but these scenarios play out more often than you think.

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. This includes speaking with a trust attorney to make sure you dot all the I’s and cross all the T’s. Don’t cheap out on this step. A professional can help you draft the appropriate documentation that can hold up in court should it come to that. What is perhaps even more beneficial is that an experienced attorney can help make you aware of scenarios you’ve never thought of before.

Don’t just let inertia dictate what happens. Taking the time to get this right is well worth the time and money.

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  • Dave says:

    Luckily, I don’t have any personal experience with this issue. But I do have a good friend whose second marriage did not end well. He wound up losing all his assets with the exception of his closely held company and essentially starting over again financially at 45 years of age.

    Nobody wants to go into a marriage planning for it to end, but the reality is that many marriages do end. And as such, if you are marrying later in life, or if you have significant assets, children, or other special circumstances, you need to think the best but plan for the worst.

    • David @ says:

      Sorry to hear about your friend’s misfortune, but thank you for letting us know that people who aren’t careful CAN lose an arm and a leg in certain unfortunate situations.

      Hopefully your friend can bounce back from this setback!

  • Dee says:

    Hi, this is my first marriage age (49) 1 grown child and second for my husband (60)3 grown children , his first wife passed away. I use to work full-time for 30 years until I got married, now I don’t work outside the house which means I have no income coming in to even think about my own bank account. My husband put my name on one bank account that has his pension going in, he has other banks accounts and 401/IRA which I’m not on. I’m not on a budget and can buy anything I want, however, my MOM always said ” whomever holds the purse, holds the power”
    So, I’m getting out an getting a job 5 years later after being home, I need to have my own bank account. He has his children name on everything else.

  • Disadvantaged Spouse says:

    nothing says “i love you” like leaving everything to your kids and telling your new wife to pay HER half of the rent and utilities and, as for everything else, it’s every man for himself. If there’s no WE in a marriage, why bother? When one spouse, let’s assume the wealthier of the two, has a stroke, can’t communicate, or becomes a burden, it seems the vow of “in sickness and in health” would be taken as lightly as this couple’s vow of “for richer or poorer. Again, if the marriage commitment means little when one partner needs to lean on the other, why bother?

  • Alexander says:

    I literally just got married a few weeks ago. (first marriage) and I cant even imagine a 2nd marriage happening but I do know that we are combining our finances now. Its for the best and will help us achieve our goal of financial freedom.

    Luckily we are both on the same wavelength when it comes to personal finance.

    • David @ says:

      Congratulations Alexander! Enjoy the occasion and remember that constant communication and love for each other can make the bond stronger!

    • Two Donate says:

      Congratulation, but I am one of those people who always believes in protecting yourself. Always have a separate account where you have at least some type of saving going on for that rainy day and make sure he doesn’t know about it.

      • David @ says:

        I agree that having a separate account for a rainy day is a good idea, but I’m not so sure that you need to hide it from your spouse. Open communication is always preferable. Just let your significant other know that you’ve put some money set aside and that the funds are “untouchable” unless there’s an absolute emergency.

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