After their first divorce or separation, some clients decide to remarry their exes. They tend to stay with them too, because they found themselves, they understand what went wrong the first time and vow to avoid it the second time. But why remarry at all? Familiarity and trust are two big reasons. Although, most feel love is lovelier the second time around. Before you dive in, here are some important things to consider.
1. Discuss a Prenuptial
Whether you’re going to remarry the same person or marry someone else, you must have the prenuptial conversation. Things can get complicated when you have all of these assets jumbled together and they now must be split.
Are you going to combine your finances again? Will you be more transparent when you create, and stick, to a budget, savings plan, or retirement goals?
2. Align Your Goals
Having aligned goals is key, and so is revisiting estate planning topics and issues. If you had kids from a prior marriage, how will this factor in if alimony was being paid? I am not a lawyer or a psychologist, but you should meet with a lawyer, and also call in a psychologist for a counseling session and a prenuptial conversation. After that, I can help guide you to work out a budget.
3. Work Toward Your Goals
We will redo your financial plan making sure everything is aligned. Even if you have a prenuptial, instead of combining everything – due to having had trouble with budgeting and spending – have only one joint account. Then, agree to pay the household expenses from this account that your social security and income also goes into. For other things, you’ll have easy access to individual checking and savings accounts.
4. What To Do About Pensions
A defined benefits monthly pension, like an established business, is not only difficult to value; it requires additional legal work to undo. Of course, there are formulas we use. Essentially, the working spouse had the pension. He or she gets this percentage, and the ex-spouse gets this percentage. If you remarry, you must go back and work with the pension team about having a new spouse, which, in this case, happens to be the same spouse.
5. Ensure You Have Estate Planning Protection
You must completely redo your estate plan when you get remarried. As you know, estate planning is an integral part of financial planning, like counseling is. I work with a couple of attorneys whose work is critical to the entire conversation.
When you remarry, will you change your beneficiary? Will you keep your kids on it? In Pennsylvania, for example, you are allowed to have any beneficiary on retirement accounts, like IRAs and Roth IRAs. With 401(k)s, your spouse must be named as beneficiary, unless the spouse gives consent to name somebody else.
I’ve seen clients keep their spouse as their 401(k) beneficiary, but on their IRAs or Roth IRAs, life insurance and other accounts, they name their kids – not the spouse – who does not need to have knowledge of that. It gets awkward too. When the husband says to me, “I want to change my kids to be the beneficiaries on my IRA.” Not only must I do it, legally, I can’t tell the other spouse what I did.
6. Verify Your Insurance
When couples in their fifties divorce, and one spouse didn’t work as much, or earn as much, generally speaking, often times, he or she will want long-term care coverage. I’ve actually seen it paid in a lump sum from the divorce settlement.
I think insurance generally is dependent on where you are in life. If you have earnings to protect, or debts you need to protect, life insurance makes sense – but it doesn’t always make sense for couples that are later in life that don’t have the need for spousal protection.
However, health insurance is a must. If there is a non-working spouse, private health insurance, albeit costly, is necessary for those under 65. We know health insurance costs rise rapidly, so make sure you’re able to secure that and there might be some concessions there.
7. Review Social Security Benefits
If you’ve been married 10 years, you can collect from your spouse’s Social Security and it doesn’t have to be continuous. Social Security has a one-year gap rule. If you’re married for seven years and get divorced, then, remarry that same person 10 months later and stay married for five years, only to divorce again, it is because you remarried within a year that those seven years are counted into the addition of the five. So, you would qualify for social security.
If marrying the same person, and the gap is longer, it won’t count. For a non-working spouse, that’s huge. Mainly, if one spouse is working and their benefits are twenty-five hundred bucks a month, you would get half, essentially losing $1,200 or $1,300 a month for the rest of your life.
8. Get the Best Advice
Remarrying your ex can be wonderful. To get to that point, however, you had to endure divorce. My best advice here is: know what you have, where it is, and place a value on it. Have a good handle on your finances because once you split and lose access to some of those things, it will be more difficult. Remember, financially, no one comes out better in divorce. Basically, you’re taking this big pot of money and cutting in it half—except the expenses don’t get cut in half. Obviously, if you can work it out, that’s preferred. This is where I can be a resource to you at Hefren-Tillotson. I assist clients in taking inventory of their assets and gathering all appropriate information and documentation. It’s best if we already know what we have from the start, and then go from there.
We can find out through discovery and other legal processes, but it’s time-consuming and expensive. You might be struggling for income and need it right away, and you’re being dragged through this very long and stressful divorce. Believe me, you don’t need that.