Your Second Marriage Financial Planning Checklist

Cindy Wang is a planning excellence insight lead at Northwestern Mutual.

Second (or third) marriages come with a special kind of optimism and the chance for a new “forever after.” But remarrying also tends to come with more financial complexities—particularly if you already have children. That’s why it’s important to take some time as you begin this new journey to put a plan in place to ensure your wishes for your family are carried out.

Figuring out the money side of remarrying is a process that requires time, discussion and forethought. Talking with your spouse-to-be, as well as a trusted financial advisor, can help ensure you make sound decisions for you and your family. Make sure you give you yourselves plenty of time to work out all the details before your wedding day.

Here are some tips to help you as you begin your new life together.  

Your second marriage financial planning checklist

1. Be transparent

A healthy relationship is based on open and honest communication, including full disclosure about where you each stand financially. To get off on the right foot and avoid surprises down the road, share all the details, including your assets, debt, credit history, and any financial support you may be required to provide or that you receive as a result of a prior divorce decree.  Being transparent allows you to make important financial decisions together and avoids unwelcome surprises down the road.

2. Decide whether it’s yours, mine or ours

A big part of merging your life with your partner’s involves deciding how to (or how not to) merge your finances. Unlike those who are getting married for the first time, most people do not enter their second or third marriage as financial equals. So you’ll need to make decisions about the co-mingling of assets and division of expenses.

Some couples may find that it makes sense to set up an account for joint expenses and keep their other assets separate. Others combine all their cash, debts and expenses. Still others might choose not to have any shared accounts, and simply split up who pays which bill. Whatever you choose, agree on specific ground rules for spending and saving.

3. Be clear about family obligations

Each of you may be entering this marriage with your own financial and familial obligations. For instance, if you plan to fund your children’s education or help support aging parents, discuss the costs and timelines for each. So if you plan to help a child pay for college or assist your parents with the bills for their long-term care, you will need to work out the details as these are big budget items and may change how you decide to account for or divvy up expenses.

4. Rethink your estate plan

Estate planning is critical when it comes to legacy planning, especially if you or your spouse are bringing children or significant assets to the marriage. Blended families often require additional estate planning because probate laws aren’t generally written with blended families in mind. Without a valid estate plan in writing, your assets might not be divided up in the way that you intended.

Estate planning includes revising existing documents, such as a will, to include your new spouse or stepchildren, updating titles and deeds, and updating your beneficiaries on any life insurance or investment accounts. Keep in mind that a prenuptial agreement (see below) also ties into an estate plan because it deals with money or assets after the death of either spouse.

5. Consider a prenuptial agreement

You may want to consider a prenuptial agreement (or prenup), which is a standard legal agreement made prior to remarriage. A prenup is a must for protecting assets, business interests, inheritances, and even debt in the case of divorce—and it also may offer creditor protection. And, contrary to popular belief, these documents are not just for those who are well off.

While no one anticipates divorce when entering a marriage, it’s certainly a possibility. Think of a prenup as insurance for the possibility that something unexpected may happen down the road.

6. Update your accounts

When you get remarried, you need to notify the applicable agencies, such as the Social Security Administration and any financial institutions, of any name changes. You will also need to update car titles, mortgages and any financial accounts that you plan to hold jointly. You will likely need to change the beneficiary information on your retirement, investment and insurance accounts to make sure your loved ones receive the correct assets per your wishes.    

Even though designating a beneficiary doesn’t take the place of a stand-alone estate plan, doing so is still a critical part of your overall planning process. Most importantly, if your beneficiary designation is different from your trust or will, the beneficiary designation will override the directions of your estate planning document. If you end up forgetting to update beneficiary designations, this creates a risk of leaving an asset to an unintended beneficiary—such as a former spouse.    

7. Dream together

Chances are, you each have retirement savings that were built around goals you set with your previous spouse. This is your chance to have a conversation about it: Set new goals for your new life together and figure out how you will achieve them. While these conversations may seem daunting, you can rest assured that you do not need to navigate these steps alone. Your financial advisor can help review what you have and help you figure out a plan to reach your new short- and long-term goals.