Matrimony is in the air, as June is the most popular month for weddings. But many of these newlyweds are not making their first trip down the aisle. And second marriages bring a host of financial issues that should be discussed well before vows are exchanged.
Furthermore, it's unfortunate but true that the divorce rate for second marriages - approximately 60 percent, according to the National Center for Health Statistics - is even higher than that for first marriages. Consequently, you'll need to protect everyone involved in a second marriage. Consider the following:
· Share all financial information - For starters, make sure both of you have copies of your credit reports. Then, each of you should list, in writing, your respective debts and assets. If either of you is divorced, be clear about obligations under a divorce decree. Each of you must be aware of any required child support or alimony payments, along with disability, life, health or long-term care insurance mandated by the divorce settlement.
· Set up a prenuptial agreement - If you have children from a previous marriage to whom you want to pass on your assets, you might want to consider establishing a prenuptial agreement in which your new spouse waives his or her rights to your property. Remember, in the eyes of the law, widows and widowers almost always have the first claims on their deceased spouse's property - so, if you want to protect your children after you remarry, establish that "prenup."
All these issues are important to deal with before your remarry. But, after the marriage, you will need to review your overall financial plans to make sure they reflect your changed circumstances. Here are a few steps you'll want to take:
· Update your will and living trust - Revise these documents to include your new spouse, and, possibly, stepchildren. If you don't have a will, now is a great time to draw one up.
· Consider "QTIP" Trust - Under a Qualified Terminal Interest Property (QTIP) Trust, your surviving spouse will have access to your assets; upon his or her death, the assets will pass to your children.
· Change your beneficiaries - Review the beneficiary designations on all of your financial documents, including insurance policies, retirement plans and annuities. Many people don't change their beneficiaries when they remarry, thus leaving earlier spouses in a position to receive assets, at the expense of new spouses.
· Evaluate your insurance - If your new marriage involves a blended family, you will need to review your life and disability insurance to see if it's sufficient. Also, once you reach your 50s, you might want to take a close look at long-term care insurance. You or your new spouse may never need to spend time in a nursing home, but, if you did, the costs would be enormous. A long-term care policy can help protect your financial independence - and the younger you are when you buy a policy, the less expensive the premiums will be.
Clearly, you'll need to consult your financial and legal adviser to address many of these issues. But don't delay - by addressing financial issues quickly, you can help your second marriage get off to a good start.