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Money & Remarriage. Before You Say, “I Do” Again.

Remarriage brings its unique set of conditions around the issue of money, primarily the financial shadows from the past. Preparing for it is a great way to avoid conflicts in the future.

Bob & Janice

Bob came in to refinance his home to pay for his daughter’s wedding. He had a small balance owing on his mortgage. His wife, Janice, thought that since he was using the equity on the home to pay for his daughter’s wedding, she requested that they consolidate all of her unsecured debt into the refinance. She said she had about $20,000 in credit card debt.

Bob bought the house in his first marriage. He added his new wife’s name to the title when he remarried. To proceed with the credit application, his banker had to pull the credit bureau reports. And discovered that his wife had over $75,000 in unsecured debt. Most of it was to help her son from a previous marriage. Bob did not know the state of her finances.

Harry & Carol

A similar incident occurred with Harry and his wife, Carol. He realized he was on the hook for over $50,000 worth of her unsecured debt after her death from helping a dead-beat stepson over the years.

Remarriage — A Unique Set of Financial Issues.

Before any remarriage can take place, they would have been a divorce. While marriage comes with its own distinct set of challenges, remarriage comes with additional issues, including “baggage” from the previous marriage.

When it comes to the issue of personal finance, remarriage comes with a financial shadow from the prior relationship. However, 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 a couple approaches their finances in a remarriage. Such as their ages and their stage in life. One person could start their career while the other is looking at retirement.

Two people coming together while their children are young will approach their finances differently from an older couple that may have established their own respective financial lives before getting together.

Financial Commitments With A Previous Relationship

Someone who has already raised their children may feel reluctant to contribute to the welfare of their new partner’s young children. 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. For example, in the honeymoon phase of a 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 if 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 a previous marriage.

Ten things to consider when thinking of remarriage.

  • Will you keep your financial affairs separate from each other?

  • Will you leave your assets to your biological children?

  • What if you each own a home?

  • Are you at the same level of financial health? One may enter with a great deal more assets than the other. On the other hand, 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 haveay child support, whereas the other may not even have had aren. 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)?

  • Do they have 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 die, the house automatically transfers to him. What happens when he dies? Will the proceeds go to his children? What about your children?

Bringing It All Together

About 50% percent of first marriages, 67% of second, and 74% of third marriages end in divorce in the U.S. The financial fallout from a divorce is often massive. However, the fallout from a second marriage may be a lot worse.

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 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. But, remarriage can also be another chance to get it right!

“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 -

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