Finance: The Second Time Around
Q: Is it a good idea to pool your money? A: "Most of my clients in second marriages maintain separate earnings and checking accounts. It's both practical and easier for record-keeping purposes. Each spouse contributes to a joint household account to pay the everyday bills, or they decide who will pay for which bills from their own account. It especially makes sense to keep money separate if alimony or child support is going in or out. Child support, in particular, is meant for very specific purposes; it's important to keep track of where the money is going. If you are paying alimony or child support, it should come out of your personal accounts. Sharing your life with someone doesn't mean you can or should share all your assets. For example, company retirement plans and IRAs legally must remain in one individual's name. College savings accounts for children should also be kept separate, as often the noncustodial parent is sharing in these costs. "Realistically, all of this depends on your level of assets and income. Joint accounts may be just fine if neither of you has significant assets, or if neither of you is getting support from a noncustodial parent and you agree to share the costs of any children."
Q: If you have kids from your first marriage, should your new husband help pay their expenses? A: "That's a very personal decision. Often, as families grow comfortable with each other, the new husband will naturally start pitching in for your children's expenses. If there's a noncustodial parent somewhere paying support, your new husband may not need to pay your children's expenses. If the noncustodial parent isn't paying support and you expect the new stepparent to ante up, you should talk about it up front."
Q: Is a prenup really necessary? A: "I'm a fan of prenuptial agreements, especially in a second marriage. I know women who say they'd never marry someone who wants them to sign a prenup -- but why not? If you have significant assets of your own, you need to protect them, and you should insist on a prenup. Look, half of all marriages end in divorce. Marriage isn't just love and emotions, it's also a business partnership meant to support a couple and a family. Would you go into any other financial partnership without written agreements? Prenups are most important in families with unequal assets, but if either side has children from prior marriages, a prenup will help eliminate issues of inheritance."
Q: What should a prenup cover? A: "All of the financial issues: assets, property rights, support obligations. Prenups should address your individual investment accounts, home and personal assets, company retirement accounts, IRAs and stock options. If one of you has rights to future income from earnings from a patent, copyright or trademark, or royalty agreements, the rights need to be protected. Address insurance coverage, especially medical. A prenup protects the family that has the assets, but it also protects the dependent partner in the event of a divorce."