Tackling the Financial Challenges of a Second Marriage

Second marriages are prone to additional stresses, particularly when there are children from a previous relationship involved. Some common problems include issues stemming from step-parenting relationships, former spouses, or unresolved behavioral or communication patterns that are left over from the first marriage. These issues can be resolved however, with patience, persistence and possibly consulting with friends or even a professional therapist.

However, there are also financial problems, which are quite common in second marriages – these issues are best addressed by estate planning and family law attorneys. A few questions to discuss with your attorney are listed below.

Should we enter into a prenuptial agreement?

To what extent shall the new spouses provide for each other during and after their marriage - in the event of death or divorce? To what extent shall their separate, pre-marital assets be protected and held for the benefit of their children from the previous marriage?

These financial and estate planning issues can drive a wedge between parties to a new marriage and should be resolved before uncertainty turns into resentment.

Some couples take care of these issues by entering into a prenuptial agreement (PNA) prior to the marriage. In the past, PNAs were considered legally unenforceable, as creating dissension and strife between the to-be-married couples right before the marriage.

It is true that PNAs can be coercive and lead to unfair bargaining and inequitable agreements. Can you imagine a fiancé giving you a draft of a PNA a week prior to the marriage, after a large wedding has been planned and all invitations sent? This has actually happened to people. Most attorneys believe that it’s unlikely a PNA executed under these circumstances would be upheld in court.

Generally, a PNA is valid if:

  • it’s entered into freely and voluntarily by both parties
  • each party was represented by a lawyer during the drafting and/or review of the PNA
  • the PNA was fair when executed, and
  • the terms of the PNA turn out to be fair at the time the parties divorce.

What can be decided with a prenuptial agreement?

A PNA usually describes what happens to the parties’ joint and separate funds and assets during marriage, and it may carve out a “marital enterprise” of joint marital economic venture. Perhaps all income earned by the parties after the wedding and during the marriage will be shared. Sometimes, increases in retirement and other assets during the marriage are shared by the couple; sometimes they are saved for the spouses’ respective children. If one party moves into the other party’s home as the marital residence, there might be provisions regarding what happens to the house and a spouse’s occupancy after divorce or death.

PNAs also generally have provisions on how to divide property if there is a divorce. Sometimes there are disappearing or “sunset” provisions so that the longer one is married (for example, 5, 10, 15, or 20 years), the more intertwined the couple’s financial resources become. This comports with Massachusetts divorce law and reflects real-life emotional and economic facts; the longer people are married to each other, the more committed they become and the more likely they are to have accrued assets and income jointly.

Another area addressed by PNAs is what happens after death. Generally, parties want to protect each other, but also want to protect their children from the previous marriage. There is usually some allocation between the surviving spouse and the party’s own children, depending on the surviving spouse’s ability to take care of him/herself after the death.

One of the techniques used to provide income to the surviving spouse (if he or she needs it) and still provide ultimate distributions to the children of the deceased spouse is the QTIP (pronounced “Q-tip”) Trust. These are special IRS-favored trusts that have special estate tax implications.

Sometimes spouses decide to give children from their previous marriages amounts outright (or in trust) that will fund the parents’ estate tax credit shelter, with the surviving spouse receiving the remainder tax-free at their spouse’s death under the “marital deduction.”

There are a myriad of options to consider when planning for these situations. The execution and details of estate plans depend on the parties’ goals and the levels of assets. You should speak with an experienced estate planner or family law attorney in your area to discuss these issues.

What is a postnuptial agreement?

It is not at all uncommon for people in second marriages to experience tension when questions come up regarding how money and assets will be split in the event of death or divorce. And, if they didn’t iron out these details before they got married, they may feel that it’s too late.

However, spouses that failed to create a prenuptial before their marriage can enter into a “postnuptial agreement.” As described by its name, postnuptial agreements are agreements between spouses involving financial matters, which are entered into after the marriage.

Like a pre-nup, a post-nup can address all financial matters between a couple, including how income will be treated during the marriage, whether either spouse will be entitled to alimony, and how separate property assets will be treated upon divorce.

Because postnuptial agreements deal with financial, divorce, and estate planning matters, the first step for couples that want a post-nup is for each spouse to hire a lawyer for help.


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