Prenuptual Agreements and Budgeting

Consider a Prenuptial Agreement

• Consider a prenuptial agreement or prenup. Given the odds against successful remarriages, especially those with children living at home, it may make sense. Some people feel that drafting a prenup is like planning for a divorce. Yet, just because you love your partner and plan to marry for life, doesn’t mean that you can’t plan for contingencies.
• A prenup can provide a trigger for full disclosure of each partner’s financial status. It spells out the assets each partner brings to the marriage and how they will be titled, how household expenses and existing debts will be repaid, and how property will be distributed in the event of death or divorce.
• Interview at least three lawyers that specialize in estate planning to find one to draft the prenup document.

Use a Spending Plan

• Develop a spending plan or budget that includes anticipated income and expenses and decide who will pay what bills. It is generally fairer to all involved to pay current expenses (not those related to a prior marriage) in proportion to each partner’s contribution to total household income (65 percent and 35 percent, for example).
• Accept the fact that support payments to an ex-spouse are an ongoing “fixed expense” that must be factored into the spending plan. So are adequate life and disability insurance.
• Remarried couples can hold separate and/or joint accounts but may prefer paying support obligations and other expenses for children with their personal funds so they are not constantly “visible” to their new spouse.