January 21, 2013

Experts say remarriage is financially complex

Many Michigan residents go through divorce with the intention of eventually finding another partner and entering into a new marriage. However, many such individuals fail to properly prepare for the implications of remarriage on their money and other assets. Just as divorce requires one to spend significant time and effort on making financial plans, those preparing to remarry should make sure they ask themselves important questions regarding their economic futures.

Financial advisors often suggest that a couple entering a second or third marriage keep shared but separate bank accounts. This can prevent a number of potentially negative effects. For instance, an individual that opens a joint credit account with a new spouse but later divorces runs the risk of being responsible for their former partner’s unpaid debt and vice versa. This can seriously harm both parties’ credit scores. Likewise, separate accounts allow spouses to keep expenses related to children from prior marriages separate.

However, some advisors say that separate accounts can keep newly married spouses from growing close. One financial expert explained, “When you handle your money together, you are agreeing on your hopes, dreams and goals.” He suggested that couples who can cooperatively reach agreements on difficult financial issues have an increased chance of saving their marriages.

Previously divorced people preparing for remarriage should be aware that they will lose any spousal support they receive from a previous marriage. Likewise, any Social Security benefits they receive from a prior relationship are likely to change. This makes it important for such individuals to consider their prospective new spouse’s financial profile, including their debt, credit scores and income. New spouses may also find themselves disagreeing on general philosophies and attitudes about money, making it important for potential couples to discuss such matters at length before tying the knot.

Source: Detroit Free Press, “Remarriage requires math, financial advisors say,” Regina Lewis, Jan. 14, 2013