Love is lovelier the second time around, but are finances?

Before remarrying, have a frank talk on money

BY PAMELA YIP
Staff Writer

When Marrying for the second time in your life, you’ll be saying “I do” to more than just your new spouse.

You’ll also be embracing a blended household where each partner will probably bring accumulate assets, debts and differing styles of money management from a first marriage.

What’s more, if you and your partner both have children from your previous unions, you’ll face unique social and psychological challenges that intertwine with the family’s finances.

Because of the many issues involved, it’s critical that partners have a frank discussion about all aspects of their financial life - before walking down the aisle.

“In general, a new marriage is an excellent time to sit down and put together a new comprehensive financial and legal plan to make certain all your wishes are understood and properly documented,” said Tom Murphy, certified financial planner at Murphy & Sylvest LLC in Dallas. “That way any disagreements can be identified and resolved early in the marriage rather than festering and creating worse problems later.”

Among the questions: How does the couple anticipate the finances and budgets to be handled after the marriage? How will important financial decisions be made after marriage?

“What are their longterm financial goals?” asked Todd Amacher, certified divorce financial analyst at Robertso, Griege & Thoele in Dallas. “When do they plan to retire, and what does retirement mean to them individually and for the new marriage?”

Here are other issues to consider as you head into a second marriage:

Owned and owed?

How much does each partner earn and spend?
How much do they own and owe?

Both Janice and Tom Gaunt of Dallas were divorced before marrying each other in 2006. They showed each other their individual investment and bank statements and income tax returns.

“It’s important that before you get married that you each have full disclosure financially of how much you have in savings, how much you have in investments, how much debt you have so that everybody is fully aware of where their partner is,” Said Janice, 58 a psychotherapist and author of The Shame Game.

That Helps to head off any unrealistic images of you significant other.

“We get into a relationship and we build up a fantasy about that person. But when it comes to remarriage and financial issues, it’s imperative that people have their feet planted on the ground,” Janice Said.

For that reason, Amacher said, both partners should view each other’s credit reports.

Dealing with debts incurred during a previous marriage is crucial because they can affect your ability to achieve financial goals with your new spouse, financial advisers said.

Also, your new spouse may not like paying debt incurred during that earlier relationship.

Texas is a community property state, so any debts incurred by one spouse may be collected from community property owned by both spouses.

Even if your divorce decree says you’re not responsible for the debt, a court can’t order a creditor to release you from the responsibility.

“Just because the divorce decree says something doesn’t mean your ex will honor it, nor does the court recognize a divorce decree regarding debt, as the creditor was not a party to the divorce decree,” said Susan A. Sylvest, partner at Murphy & Sylvest.

Providing for kids

“ If children from previous marriages are involved, understanding the financial expectations of each spouse’s responsibilities and goals for their individual children is critical,” Amacher said.

The key questions: What financial contributions will be needed from the new marriage, and will there be any contributions if the former spouse or becomes disabled?

“Misunderstandings can be tempered if these issues are throughly discussed and understood before marriage.” Amacher said.

The Gaunts agreed that Tom, 52, would pay for college for his 18-year-old son from his previous marriage.

To make things absolutely clear, the couple signed a prenuptial agreement,

“I have three daughters [ages 32, 29, and 27], so I wanted to know that if I died, that my daughters would receive my assets,” Janice said. “I felt that it kept it all really clean.”

The agreement also states that when Tom dies, his son will get his assets.

“That eliminates any sort of potential dissension between my daughters and his son,” Janice said.

A premarital agreement is a good idea in a remarriage, Amacher said.

“Chances are in a remarriage situation, there are substantially more assets brought to the table by both parties than in their first marriage,” he said. “Add to that the higher divorce rate of second and third marriages, and it becomes very important to define your assets and to structure your finances in a written agreement.”

Nitty-gritty details

Discuss with your partner how to handle the daily nitty-gritty of managing the family’s finances.

If you have different styles of managing money, try to fid common ground.

“Each spouse usually enters a second marriage with a different perspective about family finances than they had at the beginning of their first marriage,” Amacher said. “Financial issues are frequent causes of arguments in any marriage, and and the financial issues surrounding a second marriage can bring out a lot of emotion.”

Murphy said that in many second marries, the partners use a joint account to pay family bills “while each keeping a separate account for individual spending decisions.”

In those cases, he said, “deciding what percentage of the funds will go each month into the joint account is critical.”

Having a separate checking account is particularly significant for Janice, who wants to have some financial independence.

“I came into the marriage being a little more comfortable spending a little more extravagantly, like on hotels, or on clothes, and my husband was a little more conservative with that,” she said.

“In a good relationship, you learn to compromise to a place to being reasonably comfortable.”

Tom understands why his wife wants separate checking accounts - she doesn’t want to be financial dependent on someone.

“One things about getting married at this stage in life, we were in a place where neither one of us needed the other’s money,” said Tom, who’s in charge of sales for a software company. “She was financially able to care for herself.”

Also, he notes that Janice has three daughters with children, “and she wants to spoil those grandbabies.”

The system works well for the Gaunts.

“We found common ground on things that ought to be shared,” Tom said. “We have almost no conflicts about money, and that takes away one of the larger frictions a marriage might have.”

EMAIL: pyip@dallasnews.com