Couples who are planning re-marriage and preparing to “blend” their families face unique challenges and they would be wise to consider certain complexities before “tying the knot”. One major factor is the financial arrangements that are planned for the ex-spouses and/or their families. In the case of two divorced individuals with young children, the question of “yours, mine and ours” is critical. Longer term issues such as those of child custody/care; education expenses; college debt; past bankruptcies and credit scores; alimony; outstanding loans; investments; real estate and the legal matters of future inheritance require that couples share all personal information with their intended spouse.
In addition, an estate plan needs to be in place in the event of one partner being disabled or deceased in the future. How will the new “blended” family function? For example: Will the step-parent take on the full responsibilities of all step-children if an ex-spouse were to die? Have commitments been made for future eldercare? Have certain assets been promised to others?
If this seems overwhelming, it does not need to be. Start with the basic elements of gathering all the individual financial information of both partners. This would also include any existing wills, trusts, and beneficiary documents. If a family business is involved, those documents are essential to the review process.
Then, find competent professional help to review the information. Realize that full disclosure is essential at this stage. After the re-marriage is not a good time to find out that one of the couple previously has been party to a foreclosure; co-signed a loan or has other major financial problems. Remember, that both parties after the marriage will be assuming certain joint responsibilities.
A qualified tax planner; a financial advisor and an estate planning attorney are essential members of the “team”. Often, addressing sensitive issues is easier when using an “intermediary” (like an experienced estate planning lawyer) who can address any legal issue and ask pertinent questions. An Estate planning attorney also has access to qualified financial advisors; CPA’s and real estate advisors if required and would have the expertise necessary in working with those professionals.
There are studies that suggest that many adults have a stronger sense of obligation to their biological family than to the step-family. Which is why, in order to obtain a fair and harmonious balance for couples in a blended family, it is advisable to use professional legal counsel to work out the solutions. Consider also, if there is major disparity of assets or income, that both parties discuss pre-nuptial agreements.
All of this should be done prior to “setting up house” together.
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