When you’re in the throes of a divorce —particularly an acrimonious one with messy finances — the last thing you want to think about is walking down the aisle again.
However, after a few years and with a bit of perspective in the marital rear-view mirror, you might meet someone who makes you want to try again. You could cohabit without remarriage. However, some people favor a legal union.
Finances can be tricky when you marry for the second or later time. How can you protect your assets while allowing for the maximum advantages that two people bring to the matrimonial table?
Here are five tips to increase your chances of having a successful subsequent union.
Please note: Divorce laws are very state-specific. While some general advice applies in most situations, consulting with a family lawyer is advisable when planning for remarriage.
1. Don’t Rush to Remarry
People who prefer being legally coupled might have to fight the urge to tie the knot again soon after the divorce papers are final.
Take time to consider the financial impacts a remarriage may have on your life while also reflecting on what went wrong in your previous marriage before potentially making the same financial or domestic mistakes, or new ones.
An important factor you might not have considered is the effect remarrying later in life could have on your Social Security benefits. As a divorced or widowed person, you might be entitled to benefits based on your former spouse’s work record. Postponing remarriage or avoiding it all together might make financial sense even though it doesn’t sound romantic.
2. Sign a Prenup
It almost goes without saying that you and your fiancé should seriously consider signing a prenuptial agreement. While you don’t want to give more business to your divorce attorney, second or later marriages are more likely to wind up in divorce court, according to U.S. census data.
“People often underestimate the value of a prenuptial agreement,” says Melissa Levin-Piro, an attorney with Levine-Piro Law, P.C. in Maynard, Massachusetts, “But with a second marriage, prenups are especially important because individuals may be coming into the marriage with significant assets and even children from prior relationships,” she said.
By the time you divorce, you have probably accumulated assets and debts of different types. You might own a house, a business, or a sizeable pile of retirement funds. On the other hand, you might have accrued student loan debt (for your or your kids’ higher education), owe the credit card companies money or have a car note to pay off.
“Prenups allow you to specify which assets are pre-marital and which are marital, which is important when determining where those assets will go in the event of death or divorce,” says Levine-Piro.
If you outline “who gets what” in a prenuptial agreement before you remarry, it might help the two of you have a cleaner break if things don’t go as planned.
3. Tune up your estate plan
When was the last time you looked at your will and other end-of-life documents?
It’s critical to reexamine and redo your estate plan now.
Also, check your beneficiaries for your retirement accounts and insurance policies. You’ll want to ensure you leave assets to your kids or your new spouse — anyone but the person you no longer share a happy financial life with.
You might want to consider signing a Qualified Terminable Interest Property (“QTIP”) Trust. “Such a trust allows the donor to grant the surviving spouse access to income from funds in the trust for his or her lifetime, but preserves the balance of funds for other beneficiaries, such as children from the donor’s first marriage,” says Christine Boutin, a probate and estate planning attorney at Levin-Piro Law.
While it’s not a financial matter, it’s a good time to revisit your living will, health care proxies, and durable power of attorney. If you have a serious health problem, you want to make sure the right person knows your preferences in those medical situations and has the legal power to make the difficult decisions.
4. Decide Whether You’ll Maintain Joint or Separate Accounts
It’s critical to figure out how the two of you will handle your day-to-day finances. No strict rules apply because every couple’s situation and preferences vary.
You could combine your funds and pay the bills jointly. The aim is to avoid squabbles about how you split the electric bill.
Alternatively, you might prefer the system of “what’s mine is mine and what’s yours is yours.” This is particularly useful if there is a great disparity in your income, assets, or debts.
Many couples find it helpful to use a combination of approaches. You and your partner might maintain a joint account to pay for household expenses, dining, vacations, and mortgages for jointly owned property. You also keep separate accounts for personal expenses.
Whether you choose to have joint accounts, separate finances, or some combination, discuss with your future spouse the style of living you’ll want to maintain and an approximate timeline for partial or full retirement.
5. Seek Professional (Financial) Help
It’s wise to consult a fee-only financial planner, before remarriage. He or she can examine the state of your current finances as well as help you plot a path to a good economic start as a couple. That way, your union might have a better chance of long-term financial and domestic success.
Remarriage can be tricky. It’s not all about romantic love. You have economic factors to consider and important decisions to make. With professional legal and financial advice, you can set yourself up to have a better shot at happily-ever-after together.