According to a recent study, over 40% of all marriages are remarriages. Communication during the marriage, and the protection and preservation of assets becomes vital.
One of the most devastating financial surprises which can occur within one’s lifetime is debt acquired with remarriage. According to a recent study, over 40% of all marriages are remarriages. Most of us are only familiar with the statistics of marriages ending in divorce. When it comes to finances, counselling can be useful for planning purposes, both for communication during the marriage, and the protection and preservation of assets.
A great starting point is to look at each individual’s assets and debts along with their credit reports and financial statements. This information will provide an initial insight into how each individual manages their respective financial responsibility. And, reviewing this information can facilitate a discussion of spending plans, savings, budgets and investments.
Here are some financial issues to discuss prior to marriage:
- Assets, including savings, investments, real estate and retirement accounts
- Existing debts including mortgages, auto loans and credit cards
- Any outstanding obligations under a previous divorce decree
- Unpaid taxes
- Credit reports and credit ratings
- Expected joint income and cost of living to maintain a joint household
- Pre-nuptial agreements or pre-marital trusts
- Inheritances and any beneficiary arrangements
Here is a little deeper look at each financial issue:
Assets– Create and review a list of all assets to assess your new ‘joint’ financial position. Also, discuss the amount of capital you feel comfortable saving and any individual or joint savings goals.
Debts– Both parties must reveal all existing debts, including mortgages, auto loans, unpaid taxes and credit card debt. If all debt is not disclosed, a spouse could inherit financial responsibility for the spouse’s prior debts.
Obligations under a previous divorce decree- Be sure to review the contents of any previous divorce decrees for any outstanding obligations.
Unpaid Taxes– Although a new spouse should be protected against the IRS seizing assets to pay a spouse’s prior debts, the possibility still exists.
Credit– Obtain a new copy of your spouse’s credit report from one or more of the major credit agencies. Credit reports can be very revealing about the individual’s spending habits and financial management skills.
Joint Income and Cost of Living– Discuss your income and your current living expenses to build a joint household budget and spending plan.
Pre-nuptial or premarital trusts– If either party has substantial financial assets, a prenuptial or premarital trust is recommended. These documents work to keep certain property separate in the event of a future divorce, to avoid having specific property seized for prior debts of a new spouse and to prevent the disinheritance of children from a prior marriage.
Wills– Remarriage is the optimal time to update wills and trusts, updating in many cases beneficiaries on accounts and insurance.
Beneficiary Arrangements– Review current beneficiary arrangements and consider altering or changing them to reflect your new relationship.
Insurance– Review your insurance needs and consider updating current policies to reflect your remarriage.
Financial planning prior to your wedding is a very important process that although not fun, but necessary. Jim Trippon of Trippon Wealth Management has over 30 years experience in working with America’s wealthiest families in financial planning for marriage and protection of assets after marriage. Jim is an expert at providing quality tax planning for retirement plans and providing excellent ideas on reducing your tax liability, protecting your assets and planning for the future. Honest, practical and sound retirement planning advice is what makes Jim, The Advisor To America’s Millionaires.
Give us a call at 713-661-1040 and let’s start a conversation on how we can put our experience to work for you, TODAY!
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