Nearly one in five Americans has said “I do” twice or more times in their lives, according to recent data from the U.S. Census Bureau.
Sure, getting remarried gives you an opportunity to get it right, to learn from the mistakes you might have made in your previous relationship, but it can also come with a host of financial complications, legal experts say.
“Your old habits, combined with your new spouse’s, can wreck a marriage and ruin chances for a successful second attempt,” says Bruce Provda, a New York City-based divorce attorney. “Because [every couple is different] it can be hard to figure out what mistakes and habits committed in the first marriage should be avoided in the second.”
It’s not just your own personal financial baggage you have to worry about either. Whether or not your partner has been married before, he or she may have a whole host of money issues that need to untangle themselves. If children are involved on either side, fuggedaboutit.
Here are common missteps people make when they tie the knot the second time around:
You don’t get a prenuptial agreement
Forget about the stigma — prenuptial agreements should be the first step couples take before they enter a second marriage, especially if each individual is bringing assets to the table.
A prenup offers a chance to state which assets will be shared between spouses and which will be separate, says Jacqueline Newman, a family law attorney in New York City. That means that you two — and not the laws of your state — determine how your assets will be divvied up if things in the relationship don’t work out (yes, we know it’s unromantic to think about the prospect of another divorce when you’re just getting remarried, but it’s a reality couples must unfortunately have to prepare for).
“When it’s two people getting married who are both established in careers and they have kids, they just want to say what’s mine is mine and his is his and that’s it,” Newman says. “I call this the ‘separate financial lives prenup’ where basically everyone keeps their own stuff [if they divorce].”
On a basic level, a prenup can ensure that any children will be financially protected if their parent passes away. A common scenario Newman sees is when one spouse owns the home, they include a clause in a prenup stating that their surviving spouse could live there until their death but that the kids would inherit the house after that.
You keep your financial cards too close to the chest
It’s understandable to want to be protective of your finances after you’ve been divorced. But whether you decide to merge finances with your new partner, you still owe it to one another to lay all your cards on the table — debt, assets, baby mama drama, whatever. If it has the potential to impact your new family’s finances in any way, it should be out in the open.
If you’re marrying someone who has children from a past marriage, chances are they may be paying or receiving some kind of spousal or child support. They should be completely upfront about that expense and how it might impact your budget.
“When people marry people who have children, they have to get over the fact that, yes, your spouse may make good money but they may also be paying child support,” Newman says. “If they don’t, it can cause a lot of anxiety and anger.”
Also, if children from a prior marriage are under 18, before you make it official, discuss whether you might be expected to chip in for their college education or other similar big expenses. The whole point of uncomfortable conversations like these is to avoid surprises down the road.
You try to make old financial strategies work in a new relationship
It’s shortsighted to expect your new spouse to go along with whatever budgeting or spending styles you used in your past relationship. Whether you want separate accounts, joint accounts, or a hybrid system (the “yours, mine, ours” strategy), it’s important to figure out a plan for how you’ll manage your new family’s finances.
“A second marriage is not the place to try to force unworkable patterns into working,” Provda says.
Provda tells his clients to take a personal financial inventory before remarrying — decide what financial strategies from your past marriage worked, which ones you should toss, and which you need to work on. Then have a candid discussion with your new partner to decide if any of these ideas will work for you.
You forget to change your account beneficiaries
You don’t even need to pay a fancy attorney to help you change the names of your beneficiaries for your financial accounts, like your 401(k) and insurance policies. But it’s surprisingly common for couples to forget to log into their accounts and make necessary changes after they remarry or get divorced. The consequences of not doing so can be devastating. We spoke to a family last year who were stunned when they realized their father never included his children on his IRA beneficiary form. His spouse received the entire sum and his children lost a lawsuit to recover the money, which totaled more than $400,000.
When it comes to handling your estate, hiring an estate planner who is certified in your state is always a good idea. Be sure to update important documents like your will, power of attorney and living will as well.
You continue to actively manage your investments
For clients who actively manage their investment accounts, Newman has one piece of advice for when they remarry: stop trading, immediately.
That’s because any actively managed appreciation that accumulates on investments can be considered marital property, which means your spouse could wind up with a big chunk of it -- that is, if you were to later divorce. Newman sees this mistake most often among individuals who retire and decide to start playing around with their investments.
“I tell them to take that investment and just treat it like it’s not there,” she says.
A bonus tip from Newman: Spend more money on the wedding band than the engagement ring.
“The engagement ring is considered separate property after a divorce, but a wedding band is not,” she says.
