Yours, Mine, And Ours

Blended financial planning for couples with stepchildren

scenario sessions with current, real-life financial situations–either from personal experience or observation.

Financial issues facing blended families may be cultural as well as quantitative. Often, remarried couples coming from different lifestyles have issues that are difficult to reconcile. One spouse might believe that parents should spend everything necessary to make sure children get the best education while the other spouse believes that students should earn the money to pay for college. Agree on these issues before you tie the knot, or come up with a workable solution afterward.

Assuming that couples won’t want to send one spouse’s kids to Stanford while the other spouse’s children work their way through community college, such issues must be resolved by communication and compromise. Once agreement is reached on financial issues, should that agreement be formalized in a prenuptial agreement?

Experts say that prenups, as they’re known, can cause dissension. At times these agreements are waved in the face of the other spouse during heated arguments. The terms of the agreement may become points of contention. Smith, too, is skeptical of prenups but says that it is his standard practice to recommend them to clients who are remarrying so that assets will be protected.

“If you have children from a previous marriage, you should take steps to protect them, especially if those children are young,” says Mal Makin, a financial planner in Westerly, Rhode Island. “It’s not realistic to expect a new spouse to have the same loyalties to those children as your former spouse, the children’s mother or father.”

According to Makin, when some people remarry, they put all of their assets in joint name with their new spouse or they make wills leaving everything to that spouse. “There may be a verbal agreement that the new spouse will take care of the children if anything should happen,” he says, “but that puts the children from the first marriage at risk.”

A reluctance to enter into a prenup is understandable. “People want to be in a strong relationship with a trusted party,” says Makin, “and to demonstrate this trust they share all of their assets with the new spouse. But that’s not fair to the children of the first marriage, especially if there eventually are children from the remarriage.”

A valid prenup can protect the property of all the parties involved. “In order for a prenuptial agreement to be recognized by a court, both sides should have independent counsel and the agreement should not be one-sided,” says Creuzot. “Such an agreement should list both parties’ assets as of the date of the marriage.”

Of course, asking a spouse-to-be to provide a list of assets for a prenup isn’t going to win you any points at home. One tactic is to tell your prospective spouse that you’re revising your entire estate plan, which you should be doing in any event. That estate plan might include a prenup along with a new will and trust, for example.

Another approach is to tell your spouse that you have an advisor, such as an

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