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Investing and Your Second Marriage


You may have been naive about money during your first marriage. Not this time.

Embarking on a second (or even a third) marriage? Financial experts are in unison on this one: Love may be lovelier the second time around, but don't try to marry again without professional counsel. And keep your feet firmly on the ground -- especially when there are children involved.

The difference when you're older is that you most likely have accumulated some wealth and if you have children, you may want to make sure the assets are directed through a pre-nuptial agreement and/or trust.

It's particularly important to check that all beneficiary and legal information is updated. As obvious as this might sound, these kinds of estate planning details often fall through the cracks. Before the marriage is the time to re-examine your will, your living will, and any other estate planning documents.

"Make sure the right people are empowered to make decisions on your behalf," says Linda Descano, president of Women & Co., a unit of Citi (C) dedicated to helping women manage their wealth. "I hear so many horror stories where an ex-spouse is a signatory on a living will."

It also remains important to look at your financial health from both a consolidated and individual perspective. Don't lose sight of managing your individual credit score, financial health, and reputation.

For if half of all first marriages end in divorce, the failure rate is even higher for second marriages.

Descano, who is in a second marriage, says the lessons she learned the first time around (See Newly Wed and New To Investing?) have resulted in more open communication with her second husband.

"I grilled him on how he used credit and credit cards," she says. "We set up ground rules for our joint account. Our personal money we invest separately. We regularly go through our finances and look at where we are as a couple and in our individual portfolios.

"I learned the long hard lesson of what happens when you don't get involved," she adds. "We have conflict from time to time, but we try to focus on the win/win. It's a complete night and day."

Blended families raise a host of money-related issues, notes Kathy Boyle, a certified financial adviser and president of Chapin Hill Advisors.

Often, the husband is paying alimony and the new wife resents the alimony going out the door. Obligations for children from the first marriage can be a major source of conflict.

"Unless you're very wealthy, there's never enough money to go around. Clear discussions and clear guidelines are vital," she says.

Barbara Stanny, a financial coach who specializes in women's relationships with money, says that when couples argue about money, there's usually a deeper issue. Someone is usually feeling powerless or needs control.

"One of the difficulties is that very often when it comes to money, opposites attract," Stanny says. "One's a saver and one's a spender. That can be a really good thing. The spender can mellow the saver and the saver can mellow the spender. But you've got to talk about it." (See Spender vs. Saver: Balancing Love and Money).

Big goals are often easier to talk about than the smaller ones. It's often the little personal choices and decisions -- how she shops or which toys he likes to buy and navigating the conflict between wants and needs -- that are the biggest sources of conflict.

"Having been divorced twice, the first time I didn't have a pre-nup. The second time I did. It was a very tough conversation. He thought we were planning for a divorce. I said it's like wearing seatbelts in a car. You do it, but you're not expecting to have an accident."

That second marriage lasted 10 years. In her latest relationship, Stanny and her new partner of two years showed each other their complete financial statements when it became obvious they were on the path to moving in together and commingling their financial lives.

When it's possible, Stanny recommends that couples who are marrying and both bringing children into the union sit down with a team of advisers: a fee-only financial planner, an investment adviser, an estate planner, and a CPA.

The counsel from objective third parties helps to remove the emotion from the conversation and address differences each person has about goals, investment, and risk tolerance.

"If you have that team advising you," Stanny says, "and you can have those discussions openly, genuinely, honestly, and without controversy, then you're set."
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