©New
Straits Times (Used by permission)
by Rosliwaty Ramly
A STUDY conducted in the United States states that one–third of women remarried
within two to four years of a divorce while 39 per cent of men remarried in less
than two years, and 38 per cent of the women waited more than four years to
remarry.
The study, “The Financial (In) security of Women in
Remarriages”, had interviewed 426 people who are in their second marriage.
Couples heading for second marriage normally bring old baggage, courtesy of the
previous marriage.
These baggage are both emotional and financial, where the latter normally
comprises ones existing debt, old spending and budgeting habits, and financial
obligations to a former family.
Thus, it is advisable for one to think about having a prenuptial agreement, ways
of dividing assets and liabilities, and the best way of keeping personal and
household accounts.
The Association of Chartered Certified Accountants (ACCA)
offers some tips on this as outlined in its Guidebook on Personal Finance.
Current financial status
ACCA noted that the three factors above are good enough reasons to warrant those
contemplating second marriage to prepare themselves financially, otherwise the
outcome may be grave.
Among the things you need to discuss with future spouse are:
• The amount of debts you owe and to whom do you owe them.
This may include, among others, your hire purchase, mortgage, study loans and
personal loan.
• Your spending pattern, especially with the credit cards.
How much do you spend every month with credit cards, how much is your revolving
balance and how much do you put aside as savings.
• Your financial obligations to others
This may include alimony and expenses for the children from the previous
marriage or your aging parents.
If you are going to share the financial responsibilities with your future
spouse, it is best to discuss who is going to pay for what. If any of you are
unwilling to disclose the information, that should immediately send a red flag
for caution because there must be a reason for your spouse’s reluctance.
Prenuptial agreement Even if you did not sign a prenuptial agreement in the
first marriage, it is wise to consider one now, especially if you have children
from the previous marriage, own a business or is a partner in a company, or you
are on a fast career path where you are likely to earn a hefty salary.
In essence, a prenuptial agreement details the assets and liabilities that each
one of you brings into the marriage and it also spells out your agreement on the
division of assets should you file for divorce.
The issues normally addressed in the agreement are:
• Assets and liabilities
What assets are you each bringing into the marriage and what are their values
Which assets become marital property and which ones will continue to be owned
individually. What liabilities do each of you have.
• Estate planning
What will go to your children from previous marriage? What will go to children
you have in the second marriage?
• Special considerations
Will special contributions be considered if you are planning to limit the
pursuit of your career for the benefit of your children or your spouse?
What if one spouse brings more liabilities to the marriage than the other
And will there be a time limit or condition that will end the prenuptial
agreement
• If you divorce, how will you divide the assets. Will either spouse receive a
lump–sum settlement or alimony?
Assets and liabilities
When it comes to sharing assets and liabilities in the second marriage, here is
what you can do.
• Debts incurred before marriage.
It is best to keep the debts separate to protect your spouse’s property from
debtors.
• Debts incurred during the marriage.
Share the debts only if they are for jointly acquired property. Otherwise, it is
best to keep them separate.
• Property owned separately before remarriage.
Keep the assets separate because they can be used to provide for the children
from the previous marriage. It is also to protect you from losing the property
to your spouse’s creditors.
Keeping the accounts
For those entering a second marriage, it is a wise to set up at least two types
of accounts — a combined and separate account.
The combined account can be used to pay for family expenses such as utilities
and groceries. The contribution for this combined account can be made equally or
be made on proportion from each others salary. If you are earning more than your
spouse for instance, you may want to contribute 60 per cent of the total amount.
Having a separate account is useful, especially if you have financial
commitments inherited from the previous marriage.
The commitments may include alimony and child support. In fact, having a
separate account will make it psychologically easier on the marriage, when you
know that it does not come from the family’s combined account.
The experience of going through a first marriage, and subsequently a divorce,
should spur you to initiate an in–depth financial discussions with your future
spouse.
There are things you should know and do for the good of your own personal
financial health. And it will be all the more pertinent if your first marriage
crumbled due to financial issues. — Bernama