Second Marriage/Blended Family? How to Plan Your Financial Future Together

Any marriage requires honesty and compromise when working through money issues. However, when you’re planning a second marriage, family finance takes on a whole new aspect, especially if there are children involved. With a blended family, you can expect unique challenges that need to be overcome. It’s possible to join your finances as you do your families, but it takes work. A key ingredient, according to Robert Siuty, senior financial consultant at TD Ameritrade, is alignment of your goals.

Know What You Both Have

Before moving forward, it’s important to know what assets you each have now. “Review the premarital assets,” says Siuty. “Don’t forget about the debts and liabilities as well.”

Sit down and be clear about what you each own and any ongoing expenses. Here are some of the items to discuss:

• Bank and investment accounts
• Homes
• Vehicles
• Retirement accounts like 401(k)s and IRAs
• Student loans or college savings plans
• Life insurance policies
• Credit card debt
• Mortgages
• Other loans
• Income
• Regular expenses including child care costs or child support

Siuty points out that it might make sense to consider working with an attorney to prepare a prenuptial agreement. “This will spell out what’s mine and yours and what’s communal,” he says. “Some things might need to be kept separate in a second marriage, especially if you have specific obligations regarding children from another relationship.”

Once you know what financial resources and obligations you’re each bringing to the marriage, it’s possible to make a plan going forward.

Planning Your Future Finances

Your household spending plan should consider short-term and long-term goals. First, though, you need to figure out which financial resources should be combined, as well as determine who will pay for what.

With a second marriage, it might make sense to keep individual accounts so that you can provide for children or grandchildren. “When kids are involved, you sometimes have to plan with your current spouse and your previous spouse, and you might need some flexibility,” Siuty says.

As part of the process, Siuty recommends sitting down with a financial professional to look over the options, including a financial planner, a tax professional, and maybe even an estate planner.

“A good financial planner can help you create your new budget and align your joint financial goals,” says Siuty. “However, a tax professional can help you decide whether it makes sense to file your taxes separately or jointly, and an estate planner can help you assign your personal assets after you’re gone.”

As a couple, you’ll need to decide who’s responsible for which expenses, and you might need to set up a joint account for shared costs. If you both own homes, you need to decide which house you’ll live in and which you’ll rent out or sell. Perhaps it makes sense for you both to sell your homes and buy a new home together.

Additionally, you need to decide which accounts need updates to beneficiaries. Will you divide your retirement account among your children? Should your new spouse be your life insurance beneficiary? Could a trust help you set aside certain assets for your heirs?

Blended Family Finance

Other budgetary guidelines might need to be developed for handling children’s expenses and allowances, especially in a blended family where minors are part of the picture. It can be difficult to navigate spending for extracurricular activities, gifts, and other family finance issues, especially if each spouse brings differing spending habits to the new marriage. As a result, it’s a good idea to talk things over with your partner ahead of time so you’re on the same page.

Sitting down with an outside financial professional can help you work through these issues with a third party who can facilitate the discussion. When it comes to money and marriage—especially second marriages—things can get fairly heated. Having someone there to help you stay focused on the issues and make a plan can go a long way toward helping you successfully blend your family finances.

“A financial planner can help you piece the puzzle together, and help you think about things you might have missed,” says Siuty. “Sit down and talk about it before getting married, so each of you knows what you’re getting into.”

One final thing to consider: Once you have everything in place, make sure important parties (your spouse, attorney, the executor to your estate, and any other key adults) know where to find relevant documents and account details. Should there be an emergency, it can be helpful to not have to go digging through files and stacks of paperwork to find the necessary information.

Need help setting your goals in alignment? If your answer is “I do,” schedule a complimentary goal planning session today with one of our Financial Consultants.