What You Need to Know When Blending Two Families

By Douglas Goldstein, CFP®

Many second marriages are the blending of two families, not just two people. This situation raises various questions about child support, how to divide household bills, and inheritance issues. To ensure a smooth financial union, make sure to discuss these issues before the actual ceremony takes place.

Sign on the dotted line

A financial prenuptial agreement detailing which assets belong to whom and which funds will be used for specific purposes such as children’s college funds and weddings is critical in second marriages. Both spouses should use their own lawyer and the couple should meet with a financial advisor who has experience with blended families to discuss the fairest ways to protect their financial responsibilities and their children.

Joint and separate accounts

Sometimes it makes sense to keep three separate bank accounts in second marriages: his, hers, and joint. Individual accounts can continue to support previous financial commitments (child support, tuition, etc.) and a joint bank account can cover the shared expenses of your new joint life.

Plan your endgame carefully

Some of the most difficult family disputes are between children and stepchildren over a deceased parent’s assets. Should the children from the first marriage share an inheritance with step-children from the second marriage? Obviously these issues need to be handled on a case-by-case  basis, depending both on the financial status of both sides pre- and post-second marriage, and the ages of separate and shared children. 

To avoid bickering over assets and family heirlooms, estate planning is crucial. There are various ways to make sure that everyone is taken care of, from stating specific beneficiaries on your life insurance policy to creating a trust with a lifetime clause for the surviving spouse, but with your children as heirs. Titling investment accounts properly can ease inheritance (as well as tax) issues.

If you are in your second marriage and haven’t yet discussed these issues with your spouse, now is the time. Consider updating your adult children as to the result of the conversation, so there will be no surprises. Contact your financial advisor today to see if there are any changes that need to be made with titling bank accounts or updating beneficiaries.

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S, and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.