Protect clients before a third marriage

The situation

Your client is planning an elaborate wedding she hopes will erase any memories of previous, ill-considered, unions.

And although she claims she can comfortably afford the lavish affair, she hasn’t discussed ongoing financial responsibilities with her fiancé. He pays $3,500 a month in child support to his ex-spouse, while she owes $30,000 in loans and credit-card debt.

How do you get her to open up about her financial situation?

It’s easy for people to get caught up in the excitement of wedding plans, but many financial decisions also need to be discussed. If a first or second marriage left your client financially crippled, she may look for both monetary and emotional support in the next marriage.

Share the excitement of the moment with her, but then help her understand what this new marriage will mean. Each member of the couple may not share the same beliefs about money and family, so get those issues out in the open and help them work out a plan to resolve any conflicts. If either has minor children, discuss how being remarried will affect custody, child support and spousal support. Check if a change in household income status will lead your client, or her spouse, to pay more support. If so, recommend the couple meet with a lawyer now to determine if they can reduce those future payments.

Ask to see their respective debts and assets, and find out if former spouses have rights to any monies set aside for future retirement plans. If the bride and groom are bringing debt into the marriage, discuss who will be responsible for paying that off.

If there are substantial assets to protect, and your client isn’t happy with the way the law would divide them on death, refer them to a lawyer to discuss a marriage contract or to set up trusts for children from previous marriages. That lawyer can also tell them how to protect themselves in the event of another divorce.

Try these questions:

Ask

What are your overall financial concerns in this third marriage?

Not

How do we ensure you keep some money in case this marriage fails?

Ask

Are you aware of all of your husband-to-be’s financial obligations?

Not

How much alimony will this guy be shelling out?

Ask

Have you discussed how finances were handled in your last marriages?

Not

Did his last wife leave him because he’s really bad with money?

Finally, provide clients with a checklist of documents they need to update (see “What clients must update,” below). You’ll also need to decide which assets to bring into the new marriage, and which the client will keep in her own name.

What clients must update when they get remarried

• Wills
• Powers of Attorney
• Beneficiaries on registered plans
• Beneficiaries on life insurance policies
• Beneficiaries on health insurance policies
• Beneficiaries on pension plans
• New joint bank and investment accounts, if applicable