Financial Planning for Remarriage


photo credit: vonderauvisuals via photopin cc



photo credit: vonderauvisuals via photopin cc
photo credit: vonderauvisuals via photopin cc

Life Insurance Needs After Divorce & Remarriage

Written exclusively for IDoTakeTwo.com by David Rossett, a Financial Representative with the Northwestern Mutual Financial Network based in New York City for The Northwestern Mutual Life Insurance Company, Milwaukee, Wisconsin.

Life insurance, more than most of the goods and services you buy, is tied to the circumstances of your life. You buy life insurance, initially, to protect your family from financial loss stemming from your death. You tie the amount of your life insurance to the money your family will need to pay off debts, provide an income, put children through college and cover other financial commitments.

Life insurance should be reviewed periodically to make sure that it still is meeting your needs, that amounts of coverage are up to date, and that beneficiaries are correctly designated. Life insurance definitely should be reviewed in connection with any major life event. Divorce or remarriage are prime examples.

Pre & Post Divorce Considerations for financial planning

Do not assume that your insurance agent or company knows about your changed circumstances. If your spouse was your beneficiary and the designation is not changed, your former spouse may receive the proceeds upon your death. If a beneficiary designation simply reads “wife of the insured” or “husband of the insured” and there is no spouse, the secondary beneficiary will receive the proceeds. In some states a divorce automatically changes your beneficiary designations (and your appointments of trustees, UTMA custodians, etc.), whether you want them changed or not. Even if you do want the designations changed, the automatic changes may not be the ones you would select.

Life insurance may be required as part of a property settlement agreement or to guarantee the continuation of spousal or child support payments. This may involve the transfer of ownership of an existing policy, the purchase of a new policy by you or by your ex-spouse on your life, or beneficiary designations on new or existing policies owned by you.

If the premium payments are to be classed as alimony for federal income tax purposes, it is important that you consult with your attorney to be sure that both the policy ownership arrangements and the insurance provisions of the property settlement agreement meet the requirements of the Internal Revenue Code.

If you live in a Community Property Law or Marital Property Law state, it is extremely important that the ownership of your life insurance be specifically covered by the terms of your divorce decree or property settlement agreement. In those states the law may actually grant an ex-spouse more rights in a policy than they had during the marriage if the decree or settlement agreement does not specifically dispose of the policies.

If you are contemplating divorce or getting married again, you may have many options to consider with respect to your life insurance coverage. Talk to your agent without delay.

tumblr_n5wa85HJXj1st5lhmo1_1280

Top 10 Financial Tips to Consider Before Remarriage

1. Discuss finances beforehand. The first date is too soon and the honeymoon is too late.

2. What is your credit history? How much debt are you bringing into the relationship? Do you pay your credit card bills on time? Ask questions so there are no surprises when the two of you make big purchases like an automobile or a home. Consider using a credit protection service like LifeLock so there are no surprises.

3. What is your financial personality? Are you a saver or a spender? Do you live from paycheck to paycheck? Are you a penny pincher who cuts coupons? Have an honest discussion with each other about your habits because it will affect your relationship in the long run.

4. Create a savings plan. Discuss short- and long-term saving options, investments, trading systems, retirement, IRAs and 401(k) plans.

5. Communicate and negotiate everyday money matters. Should you open a joint checking account? Who will buy groceries? Who will keep track of monthly statements and bills?

6. Focus on goals, dreams and objectives. Are you saving for a home? What savings plan will you have for your children?

7. Update insurance and estate plans. Make sure you’re sufficiently insured and the beneficiary for each policy is updated. You may also need to update other estate documents.

8. Examine your tax situation. Tax laws penalize dual-income families; determine what will benefit you and your partner in advance.

9. Consider a prenuptial agreement. A prenup isn’t just for the rich; it can cover a variety of things like property, a home, inheritance and other investments.

10. Talk with a certified financial advisor. Financial planners can help you establish a plan that will help you reach your objectives.

95H

Social Security and Remarriage

  • Your age at the time of your remarriage may affect your Social Security benefits.
  • If you remarry before the age of 60, you are generally not eligible for benefits based upon your former spouse’s record unless your remarriage ends.
  • If you remarry after age 60, or you are a disabled widow or a disabled surviving former spouse who marries after age 50, you are eligible to receive the higher of the benefits of your former or your current spouse.
  • If the benefit you have received as a worker is higher than the spousal benefit, you will receive the benefit based on your own work record.
  • If your new husband (of any age) is receiving Social Security benefits, you can receive benefits based on his wage record if it is larger than your widow’s benefit, if:
    • You have been married for one year (this rule can be waived under certain conditions), or
    • You are caring for his child who is under age 16 and entitled to the benefits.

More Information on Remarriage and Social Security

  • www.ssa.gov
  • 1-800-772-1213   7:00 a.m. to 7:00 p.m. (any time zone)

Suggested Posts

Did the rehearsal dinner at your first wedding not go as well as you had hoped? If preparing for your second wedding and do not want to repeat Disaster #1, read on. Your rehearsal dinner is just that–yours–so relax and have fun! Use the following tips to make your rehearsal dinner a big success: Decide …

0 3.6k
Share

Via After the sadness, the anger and the grieving period passes – if it ever completely does, when is the right time to start dating and thinking about love again? Those are the types of questions we’re confronting today. The Question: How long should you wait to date after the death of a spouse? “When …

0 15.2k
Share

By Audrey Isaac, 100Candles.com Whether you’re celebrating an elopement between just the two of you or hosting a small celebration of 50 people, intimate weddings are in a class of their own. Sharing such a special moment with only your nearest and dearest is a meaningful way to tie the knot, made better only by …

0 4k
Share

DIY Wedding Invitation Tips Once you have decided on a date and picked the venue for your wedding, you are ready to begin the adventure of choosing your invitations. Your wedding invitations are incredibly important, because they are the first glimpse of your wedding that your guests will cast their eyes on. You want your …

0 3.5k
Share
outdoor vow renewal

  Planning an outdoor vow renewal ceremony requires special care, mainly because nature is so gosh-darn unpredictable! Take the necessary precautions and ensure your day is as stress-free as possible: 1) Have a Backup Plan Even if having your renewal in the most temperate climate ever, it’s still a very, very good idea to have …

0 5.1k
Share
bridal shower second marriage

The Question: My sister-in-laws, with the help of my maid of honor, want to host a bridal shower for me. This is the second wedding for both my fiance and myself. Is this okay? “My fiance and I presently live together so we are not registering for gifts because we just want people to come …

0 7.2k
Share