Couples looking to remarry often face a unique set of financial issues and should take several important steps, starting with a financial plan and prenuptial agreement, according to Renee Kwok, CEO and president of TFC Financial Management.
More than 1.2 million Americans are expected to get remarried this year, and of all the challenges to making a second or subsequent marriage successful, finances — and clear agreement on what’s yours, what’s mine and what’s ours — are near the top of the list, according to the Boston-based, fee-only advisory with $958 million in assets under management.
Those remarrying tend to “have more knowledge and more baggage” when it comes to financial issues, Kwok told ThinkAdvisor on Wednesday. So, having already been married is often “both an advantage and a disadvantage” for married couples, she said. Although folks who have already been married may have learned lessons from the money mistakes they made the first time around, they also tend to have more assets the second or third time, along with kids and grandkids who enter into legacy planning, which complicates things, she noted.
As is the case when entering any marriage, those getting remarried should maintain an “open line of communication” with their partner and each of them should respect any differences of opinion they have with their mates on money issues, she said. “There’s a lot of emotional baggage that comes along with money and I think the baggage grows over time,” she said, adding that “acknowledging differences” of opinion and “bridging those differences” is important.
One “real mistake” that happens all too often is one spouse staying out of financial discussions and allowing the other to serve as the CFO of the house, she said. Noting that she’s been a financial advisor for more than 30 years, Kwok said she’s seen divorces where one spouse had no idea what assets, debts and liabilities they had in the marriage and what the other person had been spending because they had delegated all financial issues to the other spouse.
Kwok insists on discussing financial issues with both spouses in a second marriage at least once a year, she said, pointing out that can head off a lot of problems because it “reduces the stress between couples and reduces the potential for a financial conflict,” which is “one of the primary source of marital discord and ultimately divorce again.”