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In our 21st century world the notion of the family is becoming increasingly complex. As more and more couples enter second relationships, financial planning also becomes ever more complicated. The so-called blended family will often include children from past relationships as well as half-siblings who are the result of the new relationship. The situation can be even more complicated for expats who may have families in different countries.With multiple commitments and possibly different priorities, the potential for conflict is ever present. In order to keep your new partnership harmonious, it is essential to do some serious talking about money from the start.Here’s how to do it.
1. Lay your cards on the table
Starting life with a new partner requires an honest approach. Both parties need to be up front about their earnings, assets, commitments and debts in order to build a relationship of trust. These are difficult subjects and it can be tempting to hide that large credit card balance but the truth will out, as they say, so honesty really is the best policy.
Your financial discussions should include details of any child maintenance you pay or receive, obligations to a former spouse, your regular expenditure on your children, your credit history, any ongoing commitments such as pension contributions, and so on.
Once you know where you are at you can talk through all the issues and work out how you will handle finances going forward.
2. Develop a common strategy
You will need to decide whether to pool all, some or none of your resources. The most common approach is for second relationship couples to keep personal finances separate with a shared account for common expenditure, however this strategy might not suit everyone. Find out what works for you and be very clear on the detail to avoid strife down the line.
There will be some tricky issues to resolve between you : whether or not both parties will support children from a prior relationship, who is responsible for debts incurred prior to the relationship, whether your assets will be shared and so on. Establish clear answers from the start.
Aside from everyday spending, you should work out a common strategy towards investing for the future. That includes retirement planning and saving for your children’s education. This is best done in consultation with a financial planner who can help you work out your goals and how to achieve them.
3. Reassess your life insurance requirements
As your family increases you may want to review the life insurance cover you have to ensure that any payout is sufficient to cover both your old family and your new one should anything untoward happen to you. Talk to your financial planner about your requirements and options.
In addition, make sure that you review the beneficiaries on your life insurance policy and other financial products, such as trusts and company retirement plans, and update them as necessary.
4. Review your estate planning
This is a crucial step in ensuring that your children, step-children and new partner inherit what you wish them to. The potentially competing interests between your children and your new spouse need to be ironed out from the start. When you get involved with a new partner you should make a note of all your assets, and those of your partner, and the value at the time you got together. You will almost certainly need to talk things through with a lawyer to find the best solution to ensure your estate is divided up according to your wishes when you die.
Whatever you circumstances or needs for financial planning assistance get in touch today.