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Second marriages are increasingly common in the US. As of 2013, 40% of all weddings involved at least one partner who had been married before. As a result, it’s more common than ever for engaged couples to need to consider how they’ll blend families and finances when they get married. 

Blending families presents unique challenges, but it can be handled smoothly if the couple prepares in advance. Below, we discuss some of the demands placed on couples entering a second marriage, as well as techniques for addressing these demands before they cause additional complications.

Demands Involved in Blending Families

Blending families and finances requires careful handling of both emotional and financial concerns. Unlike many first marriages, second marriages are more likely to require couples to consider the following:

• Managing significant assets. People who are remarrying are likely to be older and have had more time to acquire assets and investments. As such, they have more property that they may want to protect in their upcoming marriage than younger couples. For example, if one partner owns a business, they may prefer to keep it separate from the marital estate instead of commingling it with other joint assets.
• Addressing other financial obligations. Previously married people are likely to have financial commitments such as spousal or child support from prior marriages. When entering their new marriage, they must ensure they can continue to meet these obligations despite blending their finances with their new spouse. 
• Protecting children from previous relationships. If either partner has children from a prior relationship, they may want to protect assets they have set aside for those children. For instance, many parents may opt to protect assets like 529 plans and intended inheritances when remarrying to ensure that their children will receive those assets regardless of what occurs in their new marriage. 
• Handling the emotional impact of previous marriages. Finally, when considering a second or subsequent marriage, many people find that they are wary of combining their finances the way they did previously. As such, many engaged couples choose to use more structured methods of blending their financial lives than simply relying on California’s state laws regarding marital assets.

How to Blend Family Finances Effectively

The concerns above may sound familiar if you’re preparing to merge families with your partner. There is no right or wrong way to blend your finances. Some couples choose to combine everything with no reservations, others prefer to retain completely separate accounts and bills, and others find a compromise in between. 

When discussing how to manage these concerns, the goal is to find the solution that works for your specific relationship. The following four techniques can assist you in finding the right way to merge finances in your unique relationship with less stress and fewer risks. 

Talk Things Through in Advance

The best thing any engaged couple can do for their joint financial future is to discuss their expectations before getting married. Regardless of how well you believe you know your partner, it’s still valuable to sit down and discuss how you want to structure your finances. Topics worth talking about include:

• Details about your current financial situation, including earnings, assets, debts, obligations, and spending habits
• How you prefer to save or invest your funds
• Whether you would prefer to merge accounts or keep them separate
• How you will share bills and expenses
• Whether you both intend to work or expect one of you to remain at home

In addition, you may benefit from discussing how finances were managed in your previous relationships. This allows you to talk about any points of financial conflict with your previous spouse/partner and develop a plan to prevent the same problems from occurring in your current relationship. 

Think About the Future

Though it may seem unusual, it is critical to consider all future possibilities when preparing to blend your finances. It is worth considering what will happen to your assets should either of you pass away. 

If you have any assets or loved ones you want to protect, you can take the time to do so now. Discussing these details in advance ensures that you and your partner are on the same page. If you make your wishes clear before you get married, there is less risk of misunderstandings or disputes in the decades to follow.

Create a Prenuptial Agreement

One of the most common ways couples address the above concerns is by creating a prenuptial agreement. While drafting your prenuptial agreement, you will exchange comprehensive financial disclosures with your partner. You will be obliged to discuss details of how you want to handle your finances, both on a daily basis and in the future. It’s an excellent way to ensure you’re on the same page before you get married. 

Furthermore, the prenuptial contract itself protects both parties. You can use your agreement to keep certain assets separate if you choose. That can be reassuring for people who have divorced before. It also simplifies matters such as guarding your children’s inheritances or protecting a family business. If you have any concerns about blending finances, a prenuptial agreement can be invaluable.

Simplify the Process of Combining Families With Madigan & Lewis, LLP

Getting remarried is exciting, but it may come with financial complications. If you’re preparing to blend families during a second or subsequent marriage, you should consult with the expert attorneys at Madigan & Lewis, LLP. We understand the financial demands you face when remarrying. We have years of experience providing legal counsel to clients regarding these financial concerns and drafting mutually satisfying prenuptial agreements. Discover how we can simplify the process of merging your finances through a comprehensive and well-written prenuptial agreement by scheduling your consultation today.

The material contained herein has been prepared by Madigan & Lewis, LLP for informational purposes only, not legal advice. This information is not intended to create – and receipt of it does not constitute – a lawyer-client relationship between Madigan & Lewis, LLP and the reader. This website is intended to provide information about our law firm and its services and is not guaranteed to be up-to-date or complete. Internet subscribers and online readers should not act upon this information without seeking professional counsel.

Founding Partner, Kimberly A. Madigan, CFLS was recently interviewed for Bay Area Women’s Magazine. For a link to the interview, please visit
https://bayareawomenmag.com/news/view/11702/She_Strives_to_Provide_Her_Clients_Peace_of_Mind_with_Legal_Strategies_Tailored_to_Their_Needs__An_Experienced_-_Understanding_Attorney_Makes_All_the_Difference__Meet_Silicon_Valley_Attorney_Kimberly_A._Madigan 

Super Lawyers released its 2019 list of Northern California Super Lawyers and Rising Stars. We are excited to announce that both partners and all eligible associate attorneys at Madigan & Lewis, LLP were recognized.

Only the top five percent of all attorneys in Northern California are named each year as Super Lawyers. They are selected through peer nominations and evaluations along with third-party research, with a similar process for the selection of Rising Stars. No more than 2.5 percent of all Northern California lawyers are named to the list of Rising Stars, who must be under age 40 and have been in practice for 10 or fewer years.

The Super Lawyers selection process has been patented by the United States Patent and Trademark office. It has also been blessed by Courts and Bar Associations across the United States.

For more information about the details of the selection process, visit https://www.superlawyers.com/about/selection_process_detail.html.

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Guideline Child Support Presumptively Correct. The uniform California Child Support Guidelines (Fam. Code §§ 4050 – 4076) are typically used in setting the amount of child support. California law provides that the guideline formula (e.g. the figure calculated by DissoMaster) is presumptively correct. (Fam. Code §§ 4053 (k), 4057(a)). However, in limited circumstances, the Court has the authority to deviate from guideline child support where a parent provides admissible evidence showing that the use of guideline would be unjust or inappropriate under the circumstances (Fam. Code § 4057(b)).

The Extraordinarily High Income Earner. One instance where the Court can exercise its discretion to deviate from guideline arises when the payor parent has an extraordinarily high income and the guideline amount would exceed the needs of the child. (Fam. Code § 4057(b)(3)). When a parent seeks a downward deviation from guideline under this section, he or she must prove that application of the guideline would be unjust or inappropriate, and that the lower award would be consistent with the principles set forth in Family Code Section 4053 (which, among others, include that a parent’s first and principal obligation is to support his or her minor children according to the parent’s circumstances and station in life, both parents are mutually responsible for the support of their children, and the children’s best interests are the top priority). (Fam. Code §§ 4057(b), 4053).

Two Recent High Income Earner Child Support Cases. Two recent California appellate opinions addressed the issue of high income child support, and reached two different results. One case, S.P. v. F.G., affirmed the trial court’s order which deviated downward from guideline and ordered a reduction in high income earner Father’s child support obligation by about $25,000 per month less than guideline, based on a finding that Mother’s proposed expenses were unreasonable. (The Association of Certified Family Law Specialists submitted a request to depublish S.P. v. F.G.). Another case, Marriage of Usher, reversed the trial court’s order which also reduced the high-income earner Father’s child support obligation. In that case, the Appellate Court held that income is only one component to consider when making child support awards, and that given Father’s extreme wealth, a reduction in his income alone was not a sufficient change of circumstances warranting a downward modification.

A summary of both cases is provided below. For more information on this issue, please consult with a family law attorney.

S.P. v. F.G. (2016) 4 Cal. App. 5th 921. In this high income earner child support case, the trial court ordered Father to pay Mother $14,840 per month, a significant reduction from the guideline figure of $40,882 per month. (S.P. v. F.G. (2016) 4 Cal. App. 5th 921, 927). The trial court concluded that the guideline amount would be unjust or inappropriate because the Father had an extraordinarily high income and the guideline amount would exceed the needs of the child. (Id. at 928 – 929). The Court of Appeal affirmed the lower court’s order. (Id. at 936). Despite Father offering no evidence of the child’s reasonable needs, what amount of child support was in the child’s best interest, or why guideline was not in the child’s best interest, the trial court, finding that Mother’s proposed financial needs were unreasonable, (e.g. housing cost of $34,950 per month, entertainment, gifts, and vacation cost of $8,300 per month, $3,750 per month for the child’s clothing and dry cleaning costs, and $1,200 per month for the child’s cosmetology, massages, and spa treatments) deviated downward from guideline. (Id. at 927 – 929). The Appellate Court stated that the trial court properly declined to rubber-stamp mother’s claimed needs or to simply defer to the guideline amount. (Id. 934).

Marriage of Usher (2016) 6 Cal. App. 5th 347. In this high income earner child support case, the trial court issued an order reducing Father’s child support payment from $17,500 to $9,842 per month, based on his decline in employment income. Marriage of Usher (2016) 6 Cal.App.5th 347, 350. Holding that Father’s decline in employment income did not support reducing child support in light of his overall wealth (including assets of over $34M), the Court of Appeal reversed the trial court’s order. (Id.). The Court of Appeal stated that Father’s reduction in income, standing alone, did not constitute a sufficient change of circumstances warranting a reduction in child support as it is “inappropriate” to base child support on income alone where a payor parent has substantial non-income producing assets. (Id. at 359). The Court of Appeal also held that Husband’s assets could generate a 4.5% rate of return.