By Morey Stettner
Should you remarry despite red flags? Don’t expect your financial adviser to stop you.
Remarriages fail more often than first marriages. While close to half of first marriages in the U.S. end in divorce, 67% of second marriages – and 74% of third marriages – fail. This puts investment advisers in a dicey position when clients announce that they’re getting remarried.
Advisers may worry that their besotted client is making a mistake, especially if they suspect the new spouse prioritizes the client’s money over love. But should they say so?
“It’s hard to overcome a client’s enamored passion,” said Lili Vasileff, a certified financial planner in Greenwich, Conn. “Time might prove you right [that the marriage was a mistake], but by that time you’re long fired.”
Instead of cautioning a client not to remarry, advisers should take a different tack, said Vasileff, president emeritus of the Association of Divorce Financial Planners. Host a meeting with the client and the would-be spouse. Frame it as a positive, get-acquainted chat.
In the meeting, Vasileff suggests that advisers ask open-ended questions such as:
-What are your expectations for this marriage?
-What would you both like to achieve?
-What do you each have to let go of?
“It’s almost like a mini-mediation to get their goals and values out on the table,” Vasileff said. “If the adviser has qualms about the marriage, asking questions can identify where the glitches are and where the challenges are.”
Clients can draw their own conclusions about the wisdom of proceeding with the marriage after listening to their partner’s replies. The conversation can expose rifts in how each person defines a successful marriage, how their goals diverge and how baggage from their past carries over into the present.
Better yet, advisers are well suited to raise specific issues that the couple needs to hash out. Examples include potential changes in property ownership, beneficiary designations and family dynamics.
“That deepens the conversation and somewhat softens it because the unknowns can create fear and anxiety,” Vasileff said. For instance, take caregiving responsibilities. Discussing how each spouse would address a dementia diagnosis or other long-term care needs might prove eye-opening.
Moreover, when people remarry in their 60s or later, money issues take center stage.
“A critical component of a healthy marriage is understanding each other’s financial situation,” said Melissa Murphy Pavone, a New York-based certified financial planner. “I encourage clients to have honest conversations with their partner about income, debts, spending habits and long-term financial goals.”
Blended families can introduce competing interests among children, stepchildren and the new spouse, she noted. Talking through each person’s inheritance goals, financial responsibilities and intentions can mitigate tensions and ensure fairness.
If the client owns a business or real estate, advisers might seek to revise estate plans and propose a prenuptial agreement.
“I always recommend a prenup when a client remarries, especially later in life,” said Wes Shannon, a certified financial planner in Fort Worth, Texas. “I explain that it’s standard practice at our firm and it protects both parties.”
If Shannon’s client owns a business, for instance, a prenup safeguards the new spouse from any liabilities tied to the business. And because Texas is a community-property state (one of nine in the U.S.), any property acquired through marriage is generally deemed to be owned equally by both spouses. In those states, a prenup can specify how assets would be divided among blended families.
“It protects a client’s children from claims of the [spouse’s] children – and the spouse,” Shannon said. “Otherwise, if both spouses have children from previous marriages, they all have standing” to claim ownership.
If clients push back against a prenup, Shannon allays their concerns. He tells them if the marriage thrives for many years, the client can void the prenup later.
Like Vasileff, Shannon refuses to pass judgment on a client considering remarrying under questionable circumstances, citing a longtime client who remarried and divorced twice.
“I didn’t feel it was appropriate to [warn him] because that’s a losing battle,” Shannon said. “I just celebrated with him when he was happy and commiserated with him when he was unhappy.”
More: ‘I trust that my husband isn’t a gold digger’: I’m inheriting millions of dollars. My husband says I’m ‘selfish’ to keep it. Should I share it?
Plus: ‘He’s 70 and fairly wealthy’: I met the love of my life three years ago. How do I politely ask that he include me in his will?
-Morey Stettner
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
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