Many people entering into a second or third marriage find themselves in a different place financially than when they embarked on the first. Whether you’ve been left in a tough financial spot after divorce or if you have assets, children, or a business you’re trying to protect, it’s never a bad idea to up your financial readiness.
If you’re staring down a second, or even third, “I Do,” here are 4 ways to get yourself prepared financially.
1. Have an Open Conversation with Your Partner
If you haven’t already discussed finances, the time to lay it all out on the table is before the nuptials. First, be sure you understand your partner’s situation as it relates to credit, debt, and assets.
If this is a second or third marriage for both of you, it’s also important to review any financial obligations under previous divorce decrees. The last thing you’ll want is to find out that your new spouse owes child support or alimony payments that will impact your monthly cash flow.
2. Consider a Prenuptial Agreement
In the past, prenuptial agreements (prenups) were seen as a legal tool reserved for the wealthy. But the reality is, a prenup is a way for anyone to protect themselves financially, especially if you have assets like a home or business that could be at risk if the marriage ends in divorce.
While many people still harbor negative feelings about prenups, they’re designed to care for both parties. The prenup will make sure you’re fairly sharing marital assets, and they’ll be distributed evenly if there’s a divorce. It also protects you from incurring debt that you didn’t bring in the first place.
Rest assured, in no way does a prenup mean you’re planning for another divorce. It simply means you’re putting financial guardrails in place to protect yourself and your new spouse.
3. Update Your Life Insurance
As you plan your next walk down the aisle, you’ll want to be sure to update or modify life insurance policies accordingly. If you have an existing term life insurance policy or universal life insurance policy, you’ll want to take care to update:
- Beneficiaries: You may want to remove an ex-spouse from the beneficiary list unless your divorce agreement states differently. At the same time, you’ll need to decide to add your new spouse and update for any new children or step-children as needed.
- Amount: If you’re adding multiple beneficiaries, you may choose to buy more insurance or increase the amount of your policy if possible. What you originally had in place may not be enough if the lump sum needs to be split more ways.
4. Revamp Your Estate Plans
By the time of a second or third marriage, especially if these happen later in life, you may already have a will, power of attorney, or medical power of attorney in place. However, to ensure the best care for you, your spouse, and your family as you age, you’ll want to bring these documents up to date. This is even more important if you already have children from before your marriage. That may mean working with a lawyer to draft up entirely new documents or making necessary addendums to existing ones.
The Bottom Line
With age and wisdom on your side, there’s no excuse to not be financially prepared as you enter into a second or third marriage. By openly discussing finances with your partner, getting a prenuptial agreement as needed, and updating your life insurance policies and will, you’ll guarantee that your financial legacy is protected in this next chapter.
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