When Women Remarry
Finding Financial Balance
The truth is, women need to plan for a time when they may be on their own. Through divorce, widowhood, or merely the single life, the odds are very high that a woman will be caring for herself at some point in her lifetime.
Financial preparedness is essential for women throughout life, but it becomes especially important in the event of remarriage, since financial considerations may have to be made for ex-spouses and children.
Sharing joint accounts may help to dissolve any mysteries about where and how family income is spent. Many couples decide to split expenses evenly, but seriously consider having the higher wage earner pay the larger portion of the bills.
Will each spouse be responsible for the other’s debt incurred before the marriage, and if so, to what extent? Keeping the indebted spouse’s prior debt separate will help ensure the other spouse’s property remains out of reach of creditors.
Property Acquired before Remarriage
Owning previously acquired property in your own name can prevent the risk of losing personal property to your spouse’s potential creditors. Also, doing so may have estate tax benefits. Every individual may exclude a certain amount of assets from estate taxes. Keeping your own property in your own name can help ensure that you minimize estate taxes while providing an inheritance for children from a previous marriage.
The majority of couples choose to title property jointly as tenants by entirety. When one spouse dies, the home passes to the surviving spouse tax-free. Now here’s a potential problem. You pass away and the house goes to your husband. Then when he dies the house goes to his family as heirs. Any children you may have had by a previous marriage will then not receive anything from the house when your spouse dies. His estate probably won’t include your children. Therefore it’s possible your children may not receive any inheritance unless you address this legally while you are alive.
Saving enough for retirement is a major financial objective for married couples, and women have unique concerns when considering this goal. First, women typically live longer than men, so their retirement funds need to last longer. In addition, women often spend more time out of the workforce than men as a result of caregiving responsibilities, and because of this, they are less likely to have pensions and full Social Security benefits. When they do work, women typically earn 75-80% of the amount earned by their male counterparts.
Disability income insurance can provide financial protection in the event you or your spouse is unable to work because of an accident or an illness. These policies can ensure that funds for bills and expenses will continue to be available. Similarly, life insurance can provide a measure of financial security upon death. Life insurance can help ensure that children from a prior or current marriage will have the funds to attend college, the mortgage will continue to be paid, and the surviving spouse will have some replacement income.
Blended families have unique estate concerns, so it is important to plan for the final disposition of your assets. Trusts can be a valuable tool to minimize estate taxes and to help ensure that your assets are distributed to your heirs according to your wishes. For example, at death your assets can pass to a trust, from which your surviving spouse will receive income without access to the assets themselves. At the death of the surviving spouse, the assets can then pass to children from your current or previous marriage. This gives the surviving spouse financial security and provides an inheritance for your children as well. In addition, if the surviving spouse later remarries, the trust precludes your assets from their marital or community property.
Every woman who remarries needs to balance her financial past with her financial future. By addressing your financial strategies as soon as possible, you can avoid disputes and build financial security for your extended and blended families.
At Kline’s Investment Services we understand the financial complexities of a second marriage.
There are unique financial situations that need to be addressed. These include, pension benefits, insurance protection, child support obligations, estate planning, investment decisions and more. We can help, please call us at (330) 673-2988 for more information.
Securities America and its representatives do not provide legal, tax or estate planning advice. For questions about a specific legal, tax or estate planning question, please consult a qualified advisor.
Securities America and its representatives do not provide tax or legal advice. Tax-law is subject to frequent change; therefore it is important to coordinate with your tax advisor for the latest IRS rulings and specific tax advice, prior to undertaking an investment plan. Any tax or legal information provided here is merely a summary of our understanding and interpretation of some of the current income tax regulations and is not exhaustive. Investors must consult their tax advisor or legal counsel for advice and information concerning their particular situation.
Diversification can be thought of as spreading your investment dollars into various asset classes to add balance to your portfolio. Although it doesn’t guarantee a profit, it may be able to reduce the volatility of your portfolio.