Bouquet. Buffet. Bridesmaid. A blended family wedding includes all the happy you’d expect, along with something not as welcome – baggage. Whether your financial baggage is a carry-on or steamer trunk, you will each now join or reconfigure your investment systems to fit your newly blended life. The vows are the easy part; the merging of his, mine and our money not so much.
One thing is sure, each person not only wants to protect the relationship but the children they bring to it, as well as any that might be born of the new marriage.
In the exciting days of early romance, tough conversations about money are as welcome as a snowstorm in July. But, since financial issues are the leading cause of breakups and divorce, those conversations are critical. What savings, debts or financial obligations do each of you bring to your new union? Will child support be part of monthly debits? What are your attitudes about spending, financial priorities and goals? Will you, your spouse or both control the purse strings and financial decisions?
The more informed each of you are before you say “I do”, the better chance you have of a true happily ever after. There is no ‘one size fits all’ in any household but that’s even more evident in blended families. Having the tough money talk ensures that any red flags will pop up and be dealt with sooner rather than later. If you had no say in the finances of your former marriage, expressing your need to be a true partner in them now is imperative. People who’ve been bruised financially, also may be less trusting so it’s better to know your future partner’s attitude and habits regards to money sooner rather than later. Red flags are there for a reason.
Many of those stepfamilies come together of different income brackets and after accumulating their own individual assets, some of unequal balance. It’s important to know and plan around what’s hers and what’s his, both assets and debts, especially if there’s a business or property involved. A marriage contract, is too often considered negatively. In reality, they can be smart and prudent since it can be used to ensure that you are financially protected in the event of marriage breakdown or the passing of your spouse, and that what you bring into the marriage, is left to your children in your estate.
One thing is sure, each person not only wants to protect the relationship but the children they bring to it, as well as any that might be born of the new marriage. Thoughtful estate planning can ease both financial and emotional issues that arise when dealing with competing interests of your new spouse, your children and stepchildren
Consider this scenario. You marry and create a family with your children and his. You pass away prematurely, leaving all your savings to your husband. The kids from your prior marriage live with their father. Your widower gets remarried. How will the assets you left to him be distributed? How do you protect your first kids? How will you provide for your children if you pass first? These are discussions worth having with your new spouse, and with proper planning, these are issues that can be planned for and strategies put in place to ensure financial protection for all.
Some helpful steps you can take to update and refine your estate plan to reflect your new household status are:
- Will. Updating your will protects each new spouse’s assets and beneficiary distributions.
- Beneficiaries. Updating primary and secondary beneficiaries to reflect new marriage situation
on insurance plans, pensions and investment accounts.
- Trusts. Consider utilizing trusts as a means of ensuring your financial wishes for your spouse, children and stepchildren are carried out. Of particular interest for blended families can be Trusts that provide income for a spouse for their lifetime, and then go to your beneficiaries when the time comes
- Can provide a lump sum of capital to ensure there is enough capital available to provide for everyone’s competing needs. For instance, an estate now for children, without negatively impacting a survivor’s income needs.
- Financial Professional:. Adding a financial expert to your estate planning, allows for both, informed strategies to ensure your estate plan actually reflects your wishes, as well as providing a more balanced, neutral viewpoint to help you both navigate what can be a difficult conversation.
The Plan Single approach is about being informed and protecting yourself (and your family). Conscious planning and good communication are two of the most important things you can have when blending families in a financial trifecta of yours, mine and ours.