Love may not be lovelier the second time around regardless of any song lyrics. A second marriage may be a second chance, but it also has more risks because a spouse may have more assets, children from a previous relationship and a new career. Proper planning, pre-marital agreements and other measures can help couples in Texas meet these financial challenges.
Discussions about pre-marital and post-marital agreements can be unromantic and uncomfortable. But, these are the only valid way to claim specific assets from the second marriage and come to an agreement on property division and other issues without having an order imposed upon them by a court. These agreements also provide financial protection for children from a previous relationship if one of the spouses dies.
Spouses who remarry usually have more financial responsibilities such as child support, investments, estates and tax planning, which should be disclosed. Negotiating these agreements requires full transparency and preparation of a consolidated net worth statement. The failure to disclose assets and responsibilities eliminates the opportunity to engage in financial planning, harms the relationship and can invalidate a pre-marital or post-marital agreement.
Financial planning should also include coverage of the costs of raising the children such as health and child care and college tuition and how these costs will be allocated. This often becomes more important and complicated for couples who are remarrying when only one spouse has children from a previous relationship or one spouse has more financial resources than the other spouse.
Before remarriage, a person may have named a relative or even their first spouse as a beneficiary on their life insurance and retirement accounts. A second marriage requires updating beneficiary accounts and legal documents. Unless these beneficiaries updated, the second spouse and other new family members may be unintentionally left out of payouts. Likewise, wills, powers of attorney and health care directives should grant powers to new the spouse or other trusted family members.
A pre-marital agreement is meant to protect the finances both soon-to-be spouses, especially if this is their second marriage. Individuals looking to execute a pre-marital agreement or post-marital agreement should make sure to take the steps necessary to understand the terms of the agreement before signing on the dotted line.
Source: Kiplinger, “Getting remarried? 5 financial steps to take before tying the knot (again),” By Matthew Helfrich, CFP, April 20, 2018