To protect your assets before remarrying, consider these fives steps.
If you’re considering remarrying after divorce, you’re not alone. In fact, around 58% of adults decide to remarry after their first marriages end in divorce, according to Legal Jobs’ divorce statistics.
For many, that second or third marriage comes later in life. Meanwhile, it’s often accompanied by additional considerations like children from a prior marriage and existing investment accounts, real estate, and business interests. That’s why it’s important to understand how to protect your assets before remarrying.
Because while no one anticipates their remarriage ending in divorce, it happens. In addition, if your marriage lasts, failing to plan for and outline your wishes when you pass away could leave the distribution of your assets up to the laws of your state, which may not always align with your wishes.
Fortunately, there are steps you can take to protect and potentially distribute your assets before remarrying.
CONSIDER THESE FIVE STEPS TO PROTECT YOUR ASSETS BEFORE REMARRYING:
#1: CONSIDER THE MANY BENEFITS OF A PRENUP.
A prenuptial agreement or “prenup” is a contract between two people before marriage. Typically, a prenup will list all the assets and liabilities a person has coming into marriage. It also outlines their ownership rights if the marriage ends.
In other words, it details who owns what right now and who will own what in the future if the marriage ends. A prenup can be essential when remarrying, especially if you have children from a prior marriage or assets you want to protect.
The best way to think about a prenup is to compare it to an aircraft emergency landing plan. You don’t plan to use it, and odds are you won’t have to, but if you need it, it’s essential. It outlines what should happen in the worst-case scenario, solely operating as a backup plan if your marriage ends prematurely.
HERE ARE SOME BENEFITS OF A PRENUP:
- You can clarify financial rights. A big step towards protecting your assets before remarrying is defining who owns assets before and after marriage.
- You can get protection from debts. Another benefit of a prenup is it can offer protection against your spouse’s debts.
- You can avoid arguments and disputes in case of divorce. While no marriage begins with a plan to divorce, it’s a real possibility. With a prenup, you can avoid many disputes and arguments around financial assets, as you’ve already defined ownership before and after the marriage.
- You can pass separate property directly to your children from prior marriages. Lastly, a key benefit to a prenup is the ability to pass separate property directly to your children when you die. This is critical because, without a prenup, state laws could determine that your spouse has a right to most or all of your assets after you die, leaving your children cut out of the equation.
#2: IF YOU’VE ALREADY REMARRIED, CONSIDER THE MANY BENEFITS OF A POSTNUP.
A postnuptial agreement or “postnup” is like a prenup, but it’s created after marriage rather than before. This can be a critical tool for anyone who regrets not signing a prenup before walking down the aisle or for anyone whose financial or personal circumstances have changed since getting married.
Like a prenup, a postnup outlines a division of assets, detailing who owns what now and who will own what in the future if the marriage ends. Some common aspects of postnuptial agreements include:
- Decisions about each spouse’s assets.
- Alimony and maintenance expectations in the event of divorce or separation.
- Plans for each spouse’s “other payments” like legal fees or child support in the event of divorce or separation.
In addition, for those remarrying with children from a prior marriage, a postnup allows for the direction of your assets after passing.
#3: DISCUSS THE POSSIBILITY OF KEEPING YOUR FINANCES SEPARATE.
While many choose to combine finances when they marry, it’s not always that simple when remarrying. Many second or third marriages occur later in life, when your finances are more established and complex.
As such, it may make sense to keep your finances separate from your new spouse, allowing you to manage your assets, income, debts, and expenses individually. This allows both spouses to maintain financial freedom and autonomy while working together toward common goals and aspirations.
#4: ESTABLISH A REVOCABLE LIVING TRUST.
A revocable living trust is a trust document you establish during your life that can be changed at any time and comes with a number of unique benefits. For example, it allows you to avoid the probate process and direct where your assets will go after you die.
This is valuable for the following reasons:
- The probate process can be costly and time-consuming and doesn’t always lead to your desired outcomes.
- You can specify exactly who you want your assets to go to and gives you the ability to distribute assets to beneficiaries at specific age intervals rather than all at once.
To establish a revocable living trust, it’s best to consult an estate planning attorney to help determine the exact structure and outline to fit your needs.
#5: UPDATE YOUR ESTATE PLAN AND BENEFICIARIES.
Lastly, consider updating your estate plan and beneficiaries before remarrying. Many people know the importance of an estate plan, so they often create one during their first marriage.
Unfortunately, many fail to update their plan and beneficiaries after their marriage ends. So, before remarrying, it’s wise to revisit your estate plan and beneficiaries. This helps ensure that your wishes will be carried out in the event of your death or disability.
A TRUSTED WEALTH MANAGER CAN HELP YOU PROTECT YOUR ASSETS BEFORE REMARRYING
This isn’t a comprehensive list of ways to protect your assets before remarrying. However, these steps can help ensure your wealth is preserved and directed according to your wishes if you do remarry.
A trusted wealth manager like Sherwood Wealth Management can help you determine which actions make sense for you and your new spouse. Please schedule a complimentary introductory call to learn more about how we help our clients preserve and manage their wealth.
This article also appeared in The Aspen Times.