Money and Remarriage: How to Navigate Divided Loyalties and Shadows from Previous Relationships

If you thought dealing with money issues can be tricky in a marriage, it’s way more difficult in a remarriage. In a marriage, you have two people from different backgrounds with different approaches to money.

In remarriage, you also have the added dimension of dealing with existing relationships from previous unions, such as kids and an ex-spouse, besides a different relationship to money. Here is the story about Dan and Joan.

Dan and Joan

Dan was terminally ill. His wife of 20 years, Joan, was angry that he wanted to leave his assets to his three adult children from a first marriage. His rationale was that Joan was a high-income earner and did not ‘need’ his money.

Her rationale was that his children were all financially independent, and being with him for 20 years, she felt she was entitled to his assets. And there was still a balance owing on the mortgage, which she would now have to be solely responsible for after his death.

Financial Shadows

A sense of divided loyalties is one of the few issues that often arise in a remarriage, which may not be relevant in a first marriage. Remarriages often come with the added challenge of financial “shadows” from previous relationships.

The financial “shadow” I am referring to includes alimony payments, child support, insurance beneficiaries, joint accounts, etc. The following are some of the things you need to address before getting into a committed relationship.

The Kids

People who remarry when their children are adults may be well established and want to keep their finances separate from their partners.

How a couple approaches their finances will be significantly influenced by the children’s ages when the couple decides to get together and by different parenting styles: one may believe in helping their children, even when they become adults. The other may value independence.

One partner may be having to pay child support, whereas the other may not even have had any children. Some people decide to leave their jointly owned home to their partner upon death but leave their investments to their children.

Assets and Liabilities

Decide if you want to combine your resources. And how far. Will you establish new joint accounts? How willing are you to pay off your partner’s existing debts?

Both parties may not be at the same level of financial health when they enter a new relationship. One may enter with a great deal more assets than the other. One may be coming in with a massive debt load.

What if you each own a home? If only one of you owns your own home, will you add your new partner to the title? Will you expect them to add funds to it?

Financial Implications

What happens if you decide to refinance the home in the future? And the proceeds from the refinance are used to purchase a joint asset? How would you feel about commingling your assets like an inheritance from your parents?

If you buy a house and register the title as ‘joint with rights of survivorship’ with your new spouse, the house automatically transfers to him upon your death. Did you want that? What happens when he dies? What about your children? Will the proceeds go to his children?

Wills made in previous relationships need to be updated. What financial obligations does your new spouse have to their previous marriage(s)? Do they have to give up a substantial portion of their pensions to their exes?

Are they separated or divorced? There are different implications for each.

What are your financial goals, individually and as a couple? A new relationship allows for new dreams. With about half of marriages ending in divorce, as you settle into the second half of your life, you realize different considerations when entering marriage again.

The last thing you want is to have built your wealth on good financial habits only to have it taken down by someone loaded with debt. As uncomfortable as it may seem, you must schedule a time for a money conversation with your future partner.

Please don’t wait till after you are married to address them. It’s essential to understand where your partner stands on various issues to uncover your financial compatibility.

Communication and transparency are key. Discuss your values, goals, and hopes for yourselves and each other. How do you want to manage your finances in alignment with these? Remarriage is a second shot at getting it right. Please don’t blow it!

An excellent resource for dealing with money issues in a remarriage, is Patricia Schiff Estess’ book Money Advice for Your Successful Remarriage: Handling Delicate Financial Issues Intelligently and Lovingly.

Let’s Have a Conversation:

Are you considering a remarriage? Have you had a financial conversation with your partner? What best practices did you establish? If you had to give advice to other women who are about to remarry, what would it be?