December 26, 2014
The Pew Research Center reports (http://www.pewsocialtrends.org/) that four in ten American adults have at least one steprelative, defined as a stepparent, a step-or-half sibling or a stepchild, in their family. While the Pew study says that many stepfamilies operate harmoniously, it also notes that adults "feel a stronger sense of obligation to their biological family members than they do to their step kin."
That is one reason why blended family finances can get so messy.
Couples planning to blend families often have to make financial arrangements that respect previous relationships with ex-spouses and their families. Issues range from childcare and eldercare to potentially complex matters involving businesses, investment assets and real estate. That's why involving trained experts in stepfamily financial planning is a must.
Here's a basic checklist of issues and solutions potential spouses and partners should consider:
Start with all cards on the table. Today's first-time marriages or partnerships alone can introduce some staggering financial variables – business and inheritance issues, college debt, consumer debt or even past bankruptcies. Couples planning stepfamilies face even more complications. But all couples need to start with a critical first step – sharing personal information with a potential impact on finances. Start with the following:
Bring in professional expertise. Beyond disclosure, it's good to have qualified professionals who have specific expertise with blended families and their many unique issues. Both partners should start by bringing any existing advisors into the discussion. But if none exist and friends and family members don't have solid suggestions, the following organizations might provide local experts with specific skills in helping stepfamilies plan:
Address problems before move-in. Most experts tell you it's best to start any new marriage or partnership with a clean slate – or a slate that's as clean as you can make it. That's doubly true with stepfamilies. As many income, asset, debt, child custody, estate and business issues as possible should be identified and solutions put in place before the family is legally joined.
Make a fresh estate plan. Financial experts say it's time to review all money issues whenever you face a major life event, and remarriage or re-partnership certainly qualifies. Even if the individuals have their own separate estate matters in order, stepfamily issues restart the planning clock on everything.
Plan – or re-plan – your retirement. You may have planned a great retirement with a former spouse or on your own, but what if your future spouse hasn't? Whatever steps you've both taken toward retirement, you need to review your strategies so you can retire comfortably together.
Bottom line: Money issues complicate all relationships. But stepfamilies have unique, detailed planning needs that should be discussed and settled before marriage or move-in.
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