Tips For Blending Families

Couples planning to blend families often have to make financial arrangements that respect previous relationships with ex-spouses and their families. Issues range from childcare and eldercare to potentially complex matters involving businesses, investment assets and real estate. That’s why involving trained experts in step-family financial planning is a must.

Here’s a list of issues and solutions potential spouses and partners should consider before blending families:

Start by sharing all financial interests:

• Current credit reports and credit scores. Extensive loans or bad credit for one or both partners can endanger future purchasing plans for cars, home or tuition. It’s also important to share information about personal or cosigned loans to family and friends.
• Assets and liabilities. Potential spouses or partners should know each other’s financial assets and liabilities and any issues connected with them that can affect the marriage. Debt and credit issues may be a problem, but if one spouse has extensive assets, it’s important to clarify whether those assets will be shared legally or promised to others.
• Legal issues. If divorce, child custody, foreclosure, bankruptcy, or any other civil or criminal legal proceedings are pending against either partner or members of their families, full disclosure is essential.
• Business and estate issues. If potential spouses or partners have significant estate or business assets assigned to children, former spouses or family members, those commitments need to be factored into the finances of the planned marriage or partnership.

Bring in professional expertise. Beyond disclosure, it’s good to have qualified professionals who have specific expertise with blended families and their many unique issues. Both partners should start by bringing any existing advisors into the discussion. Here are a few professionals that can help with blending families:

• Financial planner
• Tax advisor
• Estate planner and attorney

Address problems before move-in. Most experts tell you it’s best to start any new marriage or partnership with a clean slate – or a slate that’s as clean as you can make it. That’s doubly true with step-families. As many income, asset, debt, child custody, estate and business issues as possible should be identified and solutions put in place before the family is legally joined.

Assign family responsibilities and roles. Blended families also mean blended parenting styles. It’s important the couple address a standard set of roles and responsibilities for all members of the blended family so there’s fairness in matters of money and behavior. Ex-spouses and partners may also need to be consulted. For example, if children will be living at home as minors or post-college, it’s worth discussing and deciding equal responsibilities for chores, academic expectations, rent or other roles that help a family operate.

Make a fresh estate plan. Financial experts say it’s time to review all money issues whenever you face a major life event, and remarriage or re-partnership certainly qualifies. Even if the individuals have their own separate estate matters in order, step-family issues restart the planning clock on everything.

Plan — or re-plan — your retirement. You may have planned a great retirement with a former spouse or on your own, but what if your future spouse hasn’t? Whatever steps you’ve both taken toward retirement, you need to review your strategies so you can retire comfortably together.

Bottom line: Money issues complicate all relationships. Step-families have unique, detailed planning needs that should be discussed and settled before marriage or move-in.