Making financial decisions as part of a second marriage can be tricky. Recently I was helping a woman who had remarried and was looking for advice on how to handle her new financial situation. Second marriages, where each spouse brings assets, debts, and children with them, need to be managed with sensitivity. Factors such as taxes, estate planning goals, and risk management strategies need consideration.
The first thing we discussed is whether to combine all the assets into one account or keep them apart. There are pros and cons to each approach. Here’s what she needed to consider:
Pros of Combining Assets
- Easier to manage – Having only one account simplifies decision-making and portfolio management.
- Risk Management – Merging assets may make it easier to diversify and properly allocate funds among different asset classes.
- Easier Tax Planning – Having only one account can make tax paperwork and filing simpler.
- Clarity – Streamlining finances into one combined asset pool could reduce confusion and provide clarity on how funds are being managed.
Cons of Combining Assets
- Complexity – If assets are combined, it might take longer to untangle should the couple divorce or when one of them passes away.
- Loss of Autonomy – Both partners may prefer to maintain their own separate accounts in order to have autonomy over their investments.
- Inequality – One partner’s income or assets might outweigh the other’s, making it difficult for them to combine resources fairly.
- Potential for Mismanagement – If there is no clear agreement between both parties about how the combined assets should be managed, it could lead to disagreements and mismanagement of the funds.
Ultimately, when deciding whether to merge assets in a second marriage, couples need to consider their individual circumstances carefully. Consider working with an experienced financial planner to help you navigate the complexities and find the right solution for your unique situation.
If you would like more information on how we can help you manage your U.S. portfolios in a second marriage, please contact me at doug@profile-financial.com
Making financial decisions as part of a second marriage can be tricky. Recently I was helping a woman who had remarried and was looking for advice on how to handle her new financial situation. Second marriages, where each spouse brings assets, debts, and children with them, need to be managed with sensitivity. Factors such as taxes, estate planning goals, and risk management strategies need consideration.
The first thing we discussed is whether to combine all the assets into one account or keep them apart. There are pros and cons to each approach. Here’s what she needed to consider:
Pros of Combining Assets
- Easier to manage – Having only one account simplifies decision-making and portfolio management.
- Risk Management – Merging assets may make it easier to diversify and properly allocate funds among different asset classes.
- Easier Tax Planning – Having only one account can make tax paperwork and filing simpler.
- Clarity – Streamlining finances into one combined asset pool could reduce confusion and provide clarity on how funds are being managed.
Cons of Combining Assets
- Complexity – If assets are combined, it might take longer to untangle should the couple divorce or when one of them passes away.
- Loss of Autonomy – Both partners may prefer to maintain their own separate accounts in order to have autonomy over their investments.
- Inequality – One partner’s income or assets might outweigh the other’s, making it difficult for them to combine resources fairly.
- Potential for Mismanagement – If there is no clear agreement between both parties about how the combined assets should be managed, it could lead to disagreements and mismanagement of the funds.
Ultimately, when deciding whether to merge assets in a second marriage, couples need to consider their individual circumstances carefully. Consider working with an experienced financial planner to help you navigate the complexities and find the right solution for your unique situation.
If you would like more information on how we can help you manage your U.S. portfolios in a second marriage, please contact me at doug@profile-financial.com
Douglas Goldstein, CFP®, GFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation on how to set up your American assets to meet your financial goals. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.
Published July 4, 2023.