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Ten tips

Harmoniously merging finances in a second marriage

© St. Petersburg Times
published June 30, 2002

Are you contemplating a second marriage but feeling uneasy about discussing finances with your spouse-to-be? If so, do everything in your power to get over it. About 60 percent of second marriages end in divorce, and the main reason cited for the breakups is -- you guessed it -- disagreement about money.

1. COMMUNICATE EARLY. Before you tie the knot, be completely up front with each other about how much money you earn, spend and owe. Be honest about child support obligations, alimony payments, business loans and other key financial details.

2. LOOK INTO A PRE- OR POSTNUPTIAL AGREEMENT. If either of you has assets you want to protect for your children, which could include a future inheritance, such an agreement is right for you. It's an important document, considering that it has more legal clout than a will.

3. MAKE A BUDGET. Establish a new budget and determine how you plan to cover your joint expenses, which may involve supporting two families and replenishing retirement savings that evaporated in your divorce.

4. TRIM YOUR SPENDING. After you make a budget and see where your money is going, you'll be able to see where you can free up money so you can save and pay off debts. This process may spark heated arguments, so stay calm and try to reach reasonable compromises.

5. JOINT OR SEPARATE ACCOUNTS? While this is a highly personal decision, many financial advisers recommend that couples have joint accounts for pooled savings, investments and household expenses. Then each person may want to establish separate checking accounts for discretionary spending.

6. THINK ABOUT THE TITLES TO YOUR PROPERTY. Do you understand the difference between "joint tenants with a right of survivorship" and "tenants in common"? If not, you need to do some homework and decide how you want to title real estate and other assets you acquired before and after your marriage.

7. CREATE A NEW ESTATE PLAN. This should include new wills, durable powers of attorney, living wills, health care proxies and trusts. Make sure your partner knows where to locate these documents in case of an emergency.

8. REVIEW YOUR RETIREMENT PLANS. Become acquainted with your employers' retirement benefits and each partner's pension plans, 401(k) accounts, individual retirement accounts and Social Security benefits statements.

9. ADJUST YOUR TAX WITHHOLDING. Be sure to make any needed changes in dependency exemptions on your W-4 form. Child-custody arrangements will affect your taxes.

10. CONSIDER YOUR INSURANCE COVERAGE. Do you have enough life and disability insurance to cover additional dependents? To determine your requirements, complete the worksheets at

-- Sources: Consumer Reports; Kiplinger's Personal Finance magazine

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