Tying the knot after a divorce may not be the first thing on most new divorcees’ minds, but it’s something that happens fairly often. After all, when couples split apart, their priority is to pick up the pieces of their lives and find a way to move forward.
For those who eventually find new love and decide to remarry, one thing these people often do not expect is how complicated the financial and estate planning issues that come with remarriage can be. It’s a problem that has caught many blended families off guard.
If you’re about to remarry or have just remarried, it helps to be aware of the following financial and legal issues you might encounter.
Shared Expenses, Income, and Assets:
If you and your new spouse have shared income and assets, these funds may be at risk if you are still financially tied to your former spouse. You and your new partner may have set up a joint account or two, where you can pool funds to pay for expenses like utilities, groceries, and mortgages—basically, family expenses.
Ask your lawyer about your financial obligations to your former spouse. It may be that you need to keep money separate to protect it from creditors, who are not necessarily bound by divorce settlements. This insulates your shared income from being involved in an old debt of your ex.
Community Property and Common Law Issues:
In a community property state like Texas, the law states that assets brought into the marriage or received individually by one spouse are owned by that spouse. However, any income or assets earned or acquired during the marriage has the presumption that it is the property of both spouses.
In contrast, a common law state requires ownership of assets to be controlled by titles and other ownership documents.
Consult your lawyer to prepare an estate plan that considers your home state, as well as any property that’s out of state.
Safeguards Against Remarriage:
Should your spouse remarry after you pass away, your assets may be at risk of being shared with that new family. Sometimes, what happens when a spouse pre-deceases a new spouse, is that none of the assets owned jointly go to children from a previous marriage. In this situation, the new spouse has the final say over who inherits these assets.
You can set up a Trust, which will ensure your assets are protected and allocated to your desired beneficiaries. A Trust will guarantee that inheritances go straight to your desired loved ones. A Trust can also indicate what happens to your home upon your death, and whether you want to leave it for the benefit of your surviving spouse or children.