The Beatles may have claimed that "all you need is love", but it is never so simple. This is especially true for those who are planning to remarry after a divorce. Merging two established families together is a difficult and challenging process by nature, but when you throw money issues into the mix, it can turn downright nasty.
These three tips on blending family finances after remarriage can help you and your partner alleviate some of the stress surrounding financial issues. This will allow you to concentrate on what matters most: your new family.
1. Discuss it Before the Marriage
Talking about money is not the most romantic topic, but it is important to have an open and honest money discussion before tying the knot. Each person should provide full disclosure of any income, assets, and debts they currently have. Sort out who will repay the debts and whether the new spouse will assume legal liability for them. If someone is entering the marriage with an ongoing expense, such as college tuition for an older child, the bill can cause serious complications in the future. Figure out now whether the child's birth parent will continue to pay for the cost or if it is an expense which both spouses should shoulder.
2. A Blended Family, but Separate Bank Accounts?
There are many ways to handle bank accounts for blended families. One way of the simplest approaches is to maintain separate bank accounts for assets brought into the relationship and then create a new, shared bank account for combined expenses. Some couples choose to contribute a portion of their income into the shared account while depositing the rest into their private accounts. Other families put all their income into the shared account once they are married. There is no right answer, rather the important thing is to find a solution that works for everyone.
3. Plan for the Future
Sit down with a financial professional to get advice on how to plan for the future as a family. You will probably want to speak with a financial planner who either has specific experience helping newly blended families or is a CERTIFIED FINANCIAL PLANNER™ and will take a holistic approach to your finances, discussing budgeting and goals, not just investments. And although it may be difficult to think about, the sooner you make financial and legal decisions about what will happen to both the children and assets if one of you passes away, the better.
While it is true you may not be able to live on love alone, money doesn't have to be the source of your new marriage's problems, either. Considering the three tips above will help you to start the conversation with your loved one about the role of money in your new family.
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