Whether their first marriages ended in death or divorce, many men and women find a new partner and say “I do” a second time. Remarriage rates have dropped over the past 30 years, according to data from Bowling Green State University. Still, nearly a quarter of marriages in 2022 were remarriages.
“It’s truly a wildly challenging arena for planning,” says Megan Miller, senior wealth advisor and managing director with MAI Capital Management in Boulder, Colorado. “There’s a lot of emotional baggage.”
Depending on how their first marriage ended, a person may be walking into a new relationship with trust issues or financial trauma. They could also have more assets and children, which may not have been factors in their first marriage.
“When people are getting married for the second time, they don’t want surprises,” says Marilyn Chinitz, a partner specializing in matrimonial and family law with Blank Rome in New York City.
If you want to avoid surprises, do the following before saying “I do” a second time:
— Provide full financial disclosure.
— Agree to a division of bills and/or assets.
— Consider a prenuptial agreement.
— Place assets in a trust.
— Update beneficiary information.
— Understand potential changes to Social Security benefits.
— Protect loved ones with an estate plan.
Provide Full Financial Disclosure
Not understanding your partner’s financial situation can lead to marital stress later, and it can be a common mistake when someone marries for the first time. “Often, young people don’t find out about a person’s finances until they walk into a marriage,” Chinitz says.
Don’t make that same mistake before entering into a second marriage. Both you and your partner should be completely transparent about your current financial situation, including assets, debts, expected inheritances and future financial goals.
“Don’t hide assets. Don’t mislead,” says Matheu Nunn, chair of the family and matrimonial practice atEinhorn Barbarito, a law firm in Denville, New Jersey.
You and your future spouse need to be fully transparent in order to make wise decisions about how to handle your money before and after your wedding day. And if your future spouse refuses to share financial information? Don’t marry them, Chinitz says.
[Read: Financial Steps to Take Before, During and After Your Divorce.]
Agree to a Division of Bills and/or Assets
Once you know where each partner stands financially, the next step is to decide how you’ll manage money going forward. For instance, determine how you’ll pay bills and what the expectation is for the assets each of you is bringing into the marriage.
In many cases, spouses want to ensure that any money or assets they bring won’t need to be split if the union later dissolves. However, that can be difficult if you begin commingling assets in the same accounts.
“You risk having the entirety of the (asset) being deemed marital in the second divorce,” Nunn says.
Working with a financial advisor is one way to ensure you’re managing your accounts in a way that protects individual assets.
But financial advisors may be able to do only so much to protect your assets. To truly safeguard your finances, you need to go a step further and talk to an attorney.
[Related:How to Navigate the Legal Hurdles of Gray Divorce]
Consider a Prenuptial Agreement
A prenuptial agreement is a legal contract that spells out the rights and obligations of each spouse should a marriage dissolve. For some relationships, a prenup is expected.
“If they are people of wealth, they are probably going to insist on a prenuptial agreement,” Chinitz says.
However, even those without significant assets should consider a prenup.
“It’s not just what you have when you get married,” Nunn says. These agreements can be written to protect future income and other assets, such as an inheritance, as well as spell out provisions for alimony. But they can’t be used to negotiate child support and custody, according to Nunn.
“People think they’re easy to set aside,” Nunn says. “They’re not easy to set aside. They’re contracts.” As a result, both parties will want to work with an attorney and make sure they fully understand the provisions before signing.
While prenups aren’t easily broken, they can be renegotiated. For instance, if one spouse has a considerable increase in income or assets, the other spouse would be wise to ask that the agreement be adjusted, particularly if it only provides a flat payout of support rather than a percentage.
Don’t wait until a relationship hits rocky waters before broaching the subject. “The best time to negotiate modifications is when you’re in a happy marriage,” Chinitz says.
[Read: Should You Get a Prenup?]
Place Assets in a Trust
Another option to protect assets prior to a marriage is to place them in a trust.
“Clients are afraid of trusts because they don’t understand them and they don’t want to give up control, but they are powerful tools,” says Azriel Baer, partner in the estate planning and trust and estate administration group of law firm Farrell Fritz in Uniondale, New York.
Placing a family business, real estate or other assets into a trust prior to a marriage ensures they won’t be subject to divorce proceedings. That’s because the trust takes ownership of those assets, and a designated trustee is responsible for managing them.
That transfer of ownership is what makes people nervous, but Baer notes that you dictate the trustee. “You can retain control to remove and replace that person,” Baer says.
Update Beneficiary Information
Retirement plans, life insurance policies and bank accounts can all have beneficiary designations, and you should revisit these when getting married for the second time.
A named beneficiary is entitled to receive an asset upon the death of an accountholder, regardless of what is written in a will. You’ll want to be sure a former spouse isn’t listed on these documents.
In some instances, however, a prior divorce will require that a former spouse remains a beneficiary on certain accounts. “Don’t run afoul of first divorce decrees,” Miller says.
Understand Potential Changes to Social Security
Both divorced and widowed spouses can receive Social Security benefits based on their previous spouse’s record, assuming certain requirements are met.
For divorcees, their marriage needed to last at least 10 years to claim spousal benefits, which can begin as early as age 62. Once a divorced individual remarries, they are unable to claim benefits based on their ex-spouse’s record.
Meanwhile, widows and widowers can receive survivor’s benefits as early as age 60 in most cases, assuming they were married for at least nine months prior to their spouse’s death. In their case, benefits can continue if they remarry, but only if they are at least age 60 before marrying again.
Understanding these rules can be helpful for planning if and how Social Security income will change in retirement. It may also affect your wedding plans. For instance, Chinitz says widows near age 60 may want to wait until after their birthday to get married.
Protect Loved Ones With an Estate Plan
An updated estate plan is another important part of premarriage planning.
“You really want to make sure that you take care of your kids because your second spouse isn’t necessarily going to do so,” Baer says.
Without a will, assets could fall to your spouse and there’s no guarantee that they will share those funds with your children or other loved ones. Even if there is no indication of friction between family members, a good estate plan can help “children feel comfortable that they aren’t going to be disinherited,” Nunn says.
Again, talk to a financial advisor and attorney about how to draft documents that will protect both your children’s and spouse’s interests. This can be especially important if your spouse has children from a previous relationship.
“A lot of people have strong feelings about how they want money to flow to their children,” Miller says. “You want your assets to go to your kids and not your spouse’s kids.”
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Saying ‘I Do’ for the Second Time? originally appeared on usnews.com
Update 08/13/24: This story was published at an earlier date and has been updated with new information.
