The old song says, “Love is lovelier the second time around,” and that may be true. The life lessons that help make a second marriage successful, however, may also cause challenges to financial planning. That may be because one or both partners are ‘streetwise’ to what can happen to assets when blended, or because there is a heightened sense of the need for financial security later in life, or because previous marriages and children have created a complex familial web to consider for inheritance or financial support. Partners in second or subsequent marriages need to consider a few elemental questions about financial longevity and financial legacy.
Financial Planning for Life
Some frank discussions need to take place to mete out the assets and income each partner brings to the marriage. Both individuals should be clear on their expectations of who will continue to own the assets, how income will be used throughout the marriage, and what will change when one partner departs. Debt needs to be a part of that discussion – in particular, the debt of each and the debt of the two together. Legal issues, such as those raised when only one partner owns the primary residence, also need to be addressed. How much longer does either partner plan to work and have income? Will one or both have retirement income or a pension or government subsidy? What is the timeline for each of those sources of funds?
Financial Planning for Legacy
Economic conditions, changes in societal behavior, and medical advancements that permit living longer have contributed to demands on the ‘sandwich generation.’ This group is positioned between aging and younger family members vying for their time, energy, and financial support. It is likely that partners in second or subsequent marriages are in or close to entering the sandwich generation and must consider the care of aging parents and children who still live at home or that have returned home.
Again, straightforward discussions about mutual children, children from previous marriages, and parents or other family members requiring care are imperative to successfully administering the distribution of wealth. It is also imperative to ensure that family members who may still be financially dependent on one or both of the partners are adequately supported presently and in the future.
Whatever the choices of the partners, it is likely that a written record of all discussions and decisions would be of benefit going forward, whether it is informal notes or a more formal written agreement between the partners. It was Sir Norman Wisdom who said: “As you get older, three things happen. The first is your memory goes, and I can’t remember the other two!”