Yours, Mine, And Ours

Blended financial planning for couples with stepchildren

Divorced couples who marry again hope they are renewing their home life for the better. However, a new marriage means taking on new responsibilities while maintaining existing ones, and those responsibilities are magnified when one or both spouses bring children into the new union.

The issue is particularly challenging when the twosome attempt to blend his and her finances into our finances. Michael M. Smith sees the concerns of blended families from two perspectives, inside and outside. As an insider, he married his wife, Greta, who already had a son from a previous marriage. Since then, they have had three children of their own. “I adopted her biological son, so he’s my son, too,” Smith says. “That makes it easier. Nevertheless, problems are bound to arise, so it’s vital for spouses to be honest with each other in this type of situation.”

As an outside observer, Smith is a certified financial planner and investment advisor in suburban Phoenix (his wife helps in the office), with many blended families among his clients. “On occasion,” he says, “I’ll meet with a couple who agree that all the children must be treated equally. After the meeting, though, one of the spouses will have a private conversation with me in which he or she says, ‘I really want to do more for my kids.’”

CHILD SUPPORT
Leftover financial rights and obligations may complicate matters when it comes to getting a blended marriage off on the right foot. “In some blended families one spouse, often the husband, will have to make child support payments to a former spouse,” says Cheryl Creuzot, president and COO of the AFP Group. “There may be income, too, if one spouse is receiving child support payments. The family’s budget must be planned with these factors in mind.”

Child support obligations definitely were on the minds of David and Gloria Williams when they were married in 1969. David had a daughter from a previous marriage and Gloria had three daughters from her previous marriage. David’s daughter remained with his ex-wife and his child support obligations continued through the child’s four years of college. “That was an expense that we had to deal with for years, under a court order,” he says, “so there was just that much less for everything else.”

Careful planning and an emphasis on education helped this blended family succeed, according to David. Both he and Gloria earned doctorates in education. He is now a manager of educational research and development while Gloria works as the director of school support services for the local school district in Austin, Texas, where they’re now living. They also had a daughter together. “All five are now professional women, doing very well,” says Gloria.

Indeed, one of those five is Creuzot, who sometimes advises blended families as part of her financial planning practice. “I generally tell people to talk over all of these issues before marrying,” says Creuzot. “They should have an idea of how they’ll handle budgeting and education funding.”

Another financial advisor recommends premarital counseling, which includes

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