I’m a Financial Expert: How I Advise My Divorced Clients Financially for a Second Marriage
Written by
Nicole B. Simpson, CFP
Edited by
Zuri Anderson
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Divorce can be quite overwhelming and financially devastating. Oftentimes, when couples make the decision to terminate a marriage, falling in love again is the furthest thing from a person’s mind.
However, after someone processes any painful impact of separation, perhaps they focused on personal growth, or even if an individual despises singleness, many people begin to explore new relationships that can often lead to remarriage. This decision can be nuanced financially, especially based on someone’s ability to have children or if an individual is advanced in age and collecting Social Security.
Several complexities that arise are based on children born from any prior relationships, a person’s present wealth status, and/or any potential debt liabilities that have been accumulated to date. Tying the knot without addressing the impact these variables can have on a new marriage can create potential chaos.
As a financial expert, here are four considerations I encourage my clients to discuss to effectively prepare for a second marriage.
Have a Legacy Planning Meeting
Since age is a major variable, it is critical to address legacy and what that means with a potential union.
If there were children from a previous marriage, how are they included in the financial picture? Is the goal to have additional children? What are the financial obligations that remain outstanding and what is the potential impact? If one is advanced in age, are the future funds being comingled? Is there property that will be acquired? What does it look like financially?Â
These are some basic starter questions that should spark addition inquiries.
Sit With a Financial Planning Expert
Once you can identify the financial vision for your new family, it is beneficial to sit with a financial planning expert so they can address any areas where financial mishaps can occur.
Oftentimes, people do not review their retirement plans and insurance policies to update their beneficiaries. Sometimes a name can remain on a deed of property if the divorce settlement didn’t require the sale of a home. A will, health care proxy and durable power of attorney can still have the previous spouse’s name recorded.
Other areas of concern are when a second marriage focuses on creating a new estate plan that does not include children from a previous marriage. What considerations or protections have you put in place for elder children? If a first marriage ends with limited assets, when you begin to accumulate resources with a new partner, how do you protect everyone?
A financial planning expert will help you create a new strategic plan.
Clearly Define Management of Previous Debt and Financial Obligations
It is important to understand what outstanding debt and financial obligations exist. If you or your partner must pay child support or alimony, discuss it in advance to determine if a new aggregate income will be susceptible to a change in support in any way.
While marriage alone isn’t an automatic trigger, an ex-spouse or the other parent can petition the court for reconsideration. Also, if you seek to purchase property together, the credit worthiness of both parties is considered. If one has significant debt such as credit card, student loan or even an outstanding mortgage, it can serve as a barrier to building a new life together.
In addition, will the obligations become joint obligations or is each party willing to manage the debt and/or liabilities they are entering into the new marriage with independently?
Let Go of the Past and Enjoy What’s Ahead
Fortunately, you didn’t allow your divorce to hinder you from looking for love, for companionship. Remember to avoid all the mistakes that may have occurred in the past and plan for a better future spiritually, emotionally and economically. Talk about what lies ahead and always look for agreement as you build your life together.
It’s official. You are older and wiser and have some idea of what marriage entails. Remember to exercise sound judgement and implement these considerations as you move forward in a new relationship. It’s never too late to build a sound financial future with the one you love.
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