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Financial considerations key in second marriages

Melinda Waldrop //March 5, 2018//

Financial considerations key in second marriages

Melinda Waldrop //March 5, 2018//

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Money may not seem the most romantic subject, but financial advisors say an upfront discussion about finances is key to avoiding conflict in marriage, whether it’s a person’s first or second time walking down the aisle.

“The main thing is transparency and honesty,” said Jean Ballentine, a Columbia-based certified financial planner and managing director of investments for Wells Fargo Advisors. “I’m sure there are couples who have financial things in their past or present – credit card debts come to my mind – that might be embarrassing to own up to, (but) if you have things hidden in your financial picture and you get married without disclosing, that’s really going to hang over you.”

That’s true for any marriage, but second marriages have more multilayered challenges, Ballentine said. There are often considerations such as spousal or child support from a previous marriage, possible issues of elder care for parents, and how to combine or keep separate more substantial individual financial assets at play.

“It helps keep the romance in the marriage by not having financial issues,” Ballentine said. ‘If you are squabbling over financial issues, that is not romantic.”

An issue that many may initially shy away from is a prenuptial agreement, but Ballentine said such an agreement can be valuable. Prenups don’t just divvy up assets in case of divorce, she said, but are also useful if a spouse dies or if there are children from a previous marriage one spouse wants to protect.

“That’s hard to bring up sometimes because it does seem very unromantic, but certainly the discussion is appropriate and at least you’ve approached it,” Ballentine said. “It’s easiest when both sides bring wealth into the marriage. It’s more difficult if just one side (does). You really do need to address that ahead of time so there are no surprises.”

Some couples may decide to keep premarital property separate, an option that Ballentine said an estate planning attorney can provide advice about. Meeting with advisors and/or attorneys before the marriage is a good idea, Ballentine said, and in some cases, individual meetings to hash out potential complications should be scheduled before a joint appointment.

Couples also need to decide if they will be combining their income streams or keeping them somewhat or completely separate and agree about what their choice will look like. If separate financial accounts work for a couple, “that’s fine, but you better decide who’s paying for what up front,” Ballentine said.

Each person needs to understand the other’s spending style and approach to finances, Ballentine said, but those getting married later in life also need to consider retirement timetables.

“One (person) could plan on retiring at 55, while the other wants to work as long as possible,” she said. “When you’re 26 and getting married, retirement’s a long way off. When you’re 50 and getting married, it’s an entirely different subject.”

Other things to consider include often-overlooked but important details such as remembering to change the beneficiary on insurance or retirement accounts so that divorced spouses from previous marriages will not inherit benefits.

Ballentine has clients list financial priorities, which could include the education of children, early retirement or purchasing a second home.

“That creates some very interesting conversations,” she said. “It sounds like such a simple thing, but that helps bring out some goals and philosophies that one side of the couple might not know.”

It’s also a good idea to see paper when possible, Ballentine said. She advises running individual credit reports and sharing them with the soon-to-be-spouse and reviewing partners’ divorce decrees.

“There’s no right or wrong way to do this. You just need to have the discussion between the two of you to be sure there are no surprises down the road,” Ballentine said. “It’s pretty straightforward. It’s just very hard sometimes to take a deep breath and do it.”

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