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BSB 806 015
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Money and marriage the second time around

Couple celebrating their second marriage

Finding a new life partner the second time around can provide a wonderful opportunity for new beginnings, but it also can bring its own challenges.

How will your families be affected? Where will you live? How will you share responsibilities? These are some of the issues that you may need to consider as you move from "me" to "we".

The financial aspects of your new relationship can also be a conversation well worth investing in as you plan to move in together or tie the knot.

How will you handle daily finances?

There are many things to consider when combining your finances – especially where children and stepchildren are involved. Decisions need to be made about whether you keep separate bank accounts or join them together. Then there are practicalities about how expenses relating to dependent children will be managed – this can get quite tricky because at different ages, some will cost more than others, one partner may have more children, or you might have different time allocations.

Different attitudes to spending and budgeting can also be another issue that may not arise until after you are already living together. Some people like to be very structured and frugal, while others might be more carefree with their spending. Decisions also need to be made on who will take responsibility for managing household expenses.

Existing debts and mortgages will also need to be dealt with, so that both parties agree on who is responsible for what.

What are your long term financial goals?

Assuming you decide to blend your finances to at least some degree, there may be many longer term financial issues that need attention.

Investment assets are an area where decisions need to be made for long term harmony. What assets do you both already have and how will ownership and decision-making be shared? What are your attitudes towards investing and how do you plan to save for retirement?

A financial planner can play a key role to help you work through such issues. They can help give you clarity and confidence in making decisions that will set you up for a future that is both prosperous and agreeable to all parties.

Do you need a prenuptial agreement?

If your situation is complex, then it may be useful to put expectations and guidelines down in writing via a prenuptial agreement, also known as a binding financial agreement (BFA). Although a BFA can sound daunting and certainly unromantic, it can be an excellent way to ease concerns over ownership and sharing of responsibilities, especially in the case of a future breakdown in the relationship.

It is essential to seek professional advice on how such an agreement will work and both parties must sign up to it in order to make it valid and binding.

Estate planning can be a minefield

Did you know that a second marriage automatically revokes the provisions of an existing Will? This means that you'll need to set up new Wills and estate plans as a priority when you re-marry.

Blended families automatically create the potential for major conflict over finances. If you or your partner dies suddenly, how funds are shared between children can be problematic. It may be worthwhile setting up testamentary trusts to protect your estate assets and help manage distribution to children smoothly and fairly.

Again, professional advice is critical to getting on top of this situation and avoiding pitfalls of poorly documented estate plans.

Superannuation and how benefits are paid out is another significant matter to attend to, due to the very specific rules that apply to the distribution of Super benefits. Speak to a financial planner to obtain a review of your benefit nominations and how they will be impacted by a second marriage.

While there can be a lot to consider, the opportunities that come with sharing your future together and create a new life are endless. By sorting out your money matters early, you can focus on more important things, like each other.

For further information or advice on how to structure your finances to suit your new family, speak to a P&N financial planner.

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