From usnews.com, May 26, 2015
By Geoff Williams
We won’t judge, but we advise discussing these topics with your mate.
It can be the best feeling in the world at first – realizing that despite your first marriage ending, there is someone else out there for you. But to marry again, or again and again, is rarely as easy a decision the second time around.
You may have not thought much or at all about finances the first time you married, but odds are good you’re thinking about them a lot now. As anyone who has been through a messy or expensive divorce knows, you would be foolish not to think about your bank account before marrying again.
So if you’re in mad, passionate love, that’s great – don’t lose that feeling. But as you move toward the altar, try out these conversation topics with your mate.
Should we keep our assets separate? If you don’t have a lot in your bank account and don’t own property, it may not matter much. If you’re in your 40s or 50s, and you both own homes and cars and have retirement savings, it may make sense to keep your finances as separate as possible. And, in case of another divorce, it may be prudent to get a prenuptial agreement, a document that virtually every financial expert seems to recommend.
Without a prenup or estate planning, “keeping assets, such as accounts in your own name, may not be enough to keep them as separate property,” says Lori Barkus, a family law attorney in Weston, Florida.
And when planning a prenup, “both parties have got to be upfront and completely honest with each other. Each party needs to know what the other’s assets and liabilities are – and if you start hiding things, that shows you don’t trust the other person,” says Jay Sukits, a University of Pittsburgh business professor who designed a financial literary course for the students.
What gets so tricky about the monetary picture in a second marriage is that it often isn’t a matter of his-and-her finances, but a question of his – and hers – and his – and hers.
That’s because each partner’s former spouses may also be involved, Sukits says.
Is Social Security something we need to be thinking about? Are you in your 50s or 60s with retirement on the horizon? If your first marriage lasted 10 years or longer, you can receive a Social Security check based on your ex-spouse’s income, if it’s higher than what your check would be (and, no, this won’t hurt your ex’s Social Security check). But if you remarry and stay married, you won’t get a check based on your ex’s benefits. That may or may not matter to you and your partner, if your own Social Security checks are ample; it’s just something to consider if your spouse’s benefits are going to be considerable, and yours aren’t.
Are we going to have assets to shed if we marry? Kimberly Foss, founder of Empyrion Wealth Management in Roseville, California, points out that you may both have houses – filled with furniture.
“As is often the case with the joining of two families, there’s bound to be some [overlap],” she says. You’ll probably each keep your car, but you’ll likely sell a home, but which home? And when?
If you aren’t careful about how you do it, Foss says, you can set yourself back financially. “Paying for doubles can certainly add up.”
Are we financially compatible? With any luck, you’ve already given this a lot of thought, since you may have run into these problems in your first marriage, but Foss also notes that your money personalities may be different.
“Some people are spenders, and some are savers,” she says. At first, she says, “this might seem harmless,” but if you had this problem with your first spouse, you already know better.
Later, Foss says, as you and your spouse think about college tuition for the kids or retirement for yourselves, your financial beliefs may start to collide. So that’s something you two should discuss if you haven’t already.
Should we just live together? You might well decide to forget marriage so you can avoid a lot of these issues. But, really, if you’re just living together to avoid financial headaches, you may still run into some problems by simply sleeping under the same roof. For instance, maybe your partner has excellent health benefits through his or her company, but because you aren’t married, you won’t get to be on the plan, says Thomas Mingone, founder and managing partner of Capital Management Group, a financial services firm in New York City.
Depending on your assets, you may miss out on certain tax benefits that you would have otherwise received. Moreover, if your partner dies with a lot of assets you feel you deserve, you could theoretically be left out in the cold if you aren’t mentioned in a will, Mingone says.
And if you aren’t married and your partner dies, he adds: “There’s a higher probability that family members of the unmarried couple will contest a will in court.”
Cyrus Amini, a vice president at Charlesworth & Rugg, an investment advisory firm in Woodland Hills, California, agrees. “What happens if one partner gets hit by a bus and is on life support?” he asks. “Does the decision-making power go to the partner or to the kids? What if it goes to the kids and they have animosity toward their mother or father, and they make a decision completely counter to the wishes of the surviving partner?”
You may find yourself in court regardless, if you live together long enough and instead of death parting you, you break up.
“Just think of Lee Marvin and his live-in girlfriend, and how they lived together before they broke up. She sued the hell out of him,” Sukits says, referring to the late actor and an infamous incident that occurred in the 1960s and 1970s. Marvin’s girlfriend, the late actress Michelle Triola, had lived with him from 1965 to 1970. Seven years later, she sued Marvin, arguing that she was entitled to financial compensation just as a divorced person would be, and the term “palimony” entered the lexicon (alimony + personal live-in relationship = palimony). The lawsuit was ultimately unsuccessful.
“We live in a litigious society,” Sukits says. “It almost doesn’t matter what the issue is. If something can be contested, somebody will sue you, so that’s the big risk you run with just living together. It’s a very sticky situation.”
So what should you do? Marry or live together? It seems as if you could run into serious problems no matter what you do.
You can – which is why there really is no right or wrong answer. This is a decision that only you and your partner can make. Or you can follow Sukits’ advice – practical but rather dispiriting for those who want to settle down with that one and only.
“If it were me,” he says, “I’d just keep going out on dates.”
This article originally appeared in May 2015, for more current information please contact Capital Management Group.