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Financial Planning And Re-Marriage

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# Wednesday, 13 September 2006
Wednesday, 13 September 2006 19:30:07 (GMT Daylight Time, UTC+01:00) ( General Life | Mortgage Insurance | Term Life | Whole Life )

Financial Planning And Re-Marriage

Financial planning for your family can be difficult. However, when one or both spouses are entering their second marriage, finances can be a sensitive subject, especially when there are children from the first marriage involved. Decisions need to be made about what finances are to be held separately by each partner, what will be owned jointly by the couple, and what provisions are made for each partner's child(ren) from the first marriage.

One of the differences between first and second marriages is the accumulation of assets. When couples are young and just starting out, it is usually beneficial to pool financial resources. However, people getting re-married may have more assets, and therefore may need to make arrangements in order to determine who is entitled to those assets.

Wills also become a topic of concern. Partners may want to leave certain assets to their children from the first marriage, and not to the second spouse. Also, the beneficiaries of life insurance policies should also be addressed. You may want to purchase another policy for your spouse, while leaving the original policy for your children.

Although this can be a tricky topic, honest communication with both partners and the children (providing they are old enough to take part) is the key. Financial obligations from the first marriage may precipitate the new couple keeping some money separate. For instance, alimony and/or child support payments may not necessarily have to be a joint financial obligation. Another issue that needs to be addressed is any and all outstanding debt incurred before the second marriage. The partners in the second marriage need to be honest about what financial obligations of their new partner they are willing to assume.

Assets are another factor in the financial planning process. If the home is owned by one partner, but being used as the family home, decisions need to be made about who will be left the family home in the event of the owner’s death. If the family home is to be left to the owner's children, then plans and funds must be made available for the remaining spouse to be able to relocate. If both people own homes, and use one as the family residence, then plans must be made for the proceeds of the sale of the second home.

There is no set formula for these issues. Individuals entering into their second marriage must resolve these issues in the format best suited for their needs. It is important to realize that these issues need to be addressed, and to make sure that all parties involved come to an understanding of their new financial obligations, as well as making sure everyone is adequately provided for.

The old rural Canadian adage,  "If you leave your farm to your son, what of equal value can you leave for your daughter?" is taking on a whole new set of complications. The solution can still be very much the same: purchase life insurance.
 

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