Life is full of transitions and with that comes the stress, excitement, and uncertainty of new beginnings. This is particularly true in finding love after divorce and merging blended families. It’s only natural that you may want some extra support during times of change and a trusted advisor to turn to. The CERTIFIED FINANCIAL PLANNERTM professionals at Marshall Financial are experienced in helping clients navigate through life’s transitions and create the ideal future for their blended family. Here are a few things to consider that you may not have thought of in planning for blended family finances.
Set Budgeting Expectations
Single people are used to working on their own budget. How do you envision planning your budget once you are living together? Will each biological parent be providing for their own child or will there be a single budget based on the family’s combined needs? It is possible to keep finances separate once remarrying (or cohabitating), but if you out-match your partner’s salary (or vice versa), it can be hard to create a lifestyle together that feels balanced.
When planning your blended family budget, consider future expenses and how you each plan to pay for them. Who will pay for summer camp, braces, or sports supplies? How much in allowance do the kids receive, if at all? Is an ex-spouse contributing for schooling expenses? It can get trickier once your children are college-aged, as getting remarried can impact your child’s financial aid package.
Make sure you have a clear picture of each of your debts and/or financial obligations as well. Do either of you have student loans or credit card debt? Do you owe spousal or child support from a previous marriage? Will either of you need to provide financial support for an aging parent in the near future? Having a plan in place for how you’ll tackle debt can help ease tension over money and potential arguments over who will be responsible for it.
It’s important to have open communication with your partner so that life’s expenses don’t catch you off guard. Also, be sure to weigh your options with a wealth advisor so you know your full financial picture.
To Retitle or Not Retitle
When getting remarried, or even just taking the next step of moving in together, it’s common for one person to move into the other’s home. Consider whether the home will become a joint asset or if it will continue to stay in one partner’s name.
If the house stays in single ownership, make sure to work with an attorney to plan for your spouse to be taken care of if you were to pass, while also having it pass on to your children (if that is your intention). You don’t want your children kicking out their stepparent so they can gain access to inheritance money.
Find a Lawyer You Trust
Having gone through a divorce, you probably already know the value of a good lawyer. In bringing two families together, it can be a good idea to review your estate documents with an attorney to ensure everything is set up how you envision it. For example, an estate attorney can help set up a trust, if you don’t already have one, which can be extremely helpful in distributing your wealth according to your vision. You can also make sure you have designated gifting in place for your children, while supplying spousal support for your new partner (just like in our earlier example of keeping them in the house you share).
A lawyer can also help you set up a prenuptial agreement, which are common for second marriages. It’s not your first rodeo, so you know the value of having a plan in place should things go sour. A prenuptial agreement is particularly useful when there is a family-owned small business involved.
Plan for Your Future, Together
Planning for your blended family can get complicated. The CERTIFIED FINANCIAL PLANNERTM professionals at Marshall Financial have been working with families of all shapes and sizes for more than 40 years. Marshall’s wealth advisors help manage all parts of your wealth so that you can enjoy your new lives together today and your future retirement.
We’ve also spent a great deal of time curating a network of vetted professionals, like attorneys, to help you through all stages of life. If you find yourself at a turning point of life, click the button below to book an initial consultation with one of our CFP® practitioners.
