John Gresco never expected to remarry.
He was happily married in 2009 when his wife, Kathy, suddenly collapsed while getting the couple's four children ready for school. She suffered a massive heart attack and died at age 43.
After time passed, Gresco dated a little, and then he started spending more time with Kristen Falloon, who is godmother to one of his children.
"We understood each other and had a lot more things in common than we ever knew," says Gresco, who is 44 and lives in Southern New Jersey. "The sparks and the fluttering of the heart you had when you were a kid just came back."
The couple (right) got engaged in 2011. With a wedding date set, they are talking about how they're going to merge their two households -- including Gresco's kids, ages 14, 13, 11 and 8, and Falloon's 10-year-old son -- and their finances.
There are a lot of bases to cover. Here are six essential topics that they are discussing and that every couple should address before tying the knot a second time.
1. Together or separate?
All couples must make decisions about everyday money management, but there's a twist for those entering second marriages. "It's different than getting married for the first time when you just jump in and put it together assuming everything's going to be wonderful," says Peggy Cabaniss, a certified financial planner in Lafayette, Calif.
There is no one right way to manage money and create a budget, and no one says you have to go "all in" right away. Start slowly.Begin with a joint account for the house and individual accounts for personal purchases. Come up with a game plan to satisfy your individual and shared goals, and reevaluate every six months.Gresco and Falloon still have separate accounts, and most of the house bills are in Gresco's name."I will have her name added when she is living here, and we will then go to a joint account," he says. "It will be a community pot."
2. Embrace full disclosure.
Disclose all financial responsibilities before you say "I do." Those marrying for a second or third time may have obligations to a former spouse, such as child support, alimony or health-care coverage or life insurance premiums. Those costs are going to affect your new married budget, so your new spouse needs to know the details.
3. Come clean on debt.
Debt discussions have been out in the open for Gresco, a teacher, and Falloon, who works in hotel sales. While Gresco is in good financial shape, Falloon has significant credit card debt, which she laid out for her fiancé. Gresco offered to help pay it down, but Falloon says that because she accumulated the debt, she intends to pay it off.
Like this couple, you should come clean long before your wedding day. Pull your credit reports and go over credit card bills and other unpaid debts. Trade credit scores. Together, you can come up with a plan to get in a better financial place, and there will be no surprises. [If credit is a problem, here are a few pointers on how to rebuild your credit.]
4. Set goals.
You're going into this marriage for the long term, so that means retirement planning. Be sure to:
- Do a portfolio check: With marriage, your retirement accounts will stay in each of your names, but you potentially have a larger pot of money to reconcile. Analyze your portfolios and see if investments overlap. Try Morningstar's Instant X-Ray tool to compare your investments.
- Review your time horizon: Now that you're married, your target retirement date may have changed. See if your asset allocation fits your new goals.
- Check your risk tolerance: To see how far apart your investing philosophies may be, take BankRate's risk tolerance test.
- Are you saving enough? You may be able to afford to contribute more, or less, once you're married.
If you find your views are far different from your partner's, consider hiring an objective financial planner to help. [Here's how to find one.]
[Related: SecondAct's Retirement Savings Center]
5. Protect pre-marital assets.
If you've accumulated assets before your second marriage, you may want to consider a pre-nuptial agreement, says Catherine Romania, an estate planning attorney in Newark, N.J. "Many times children from a first marriage may feel entitled to such assets, and if the assets are left entirely or primarily to the surviving second spouse, family disharmony results," Romania says. Consider working with an estate planning attorney to create the documents that best meet your family's needs.
6. Discuss the unthinkable.
When you're choosing wedding cake flavors and invitations, you don't want to think about death. But you should. Any time there's a major life event, you should review your estate planning documents. These include:
- Last Will and Testament: You state your wishes related to your property and guardianship of minor children.
- Powers of Attorney: This gives someone the power to handle your financial affairs.
- Living Will or Advance Directive for Health Care: This appoints someone to handle health-care decisions if you're unable to do so.
- Trusts: These determine who receives assets and may help with tax savings.
Without these documents, the laws of the state in which you live will determine how your property is distributed after you die, and how your physical and financial needs are managed while you're alive. Be sure to update the beneficiaries on retirement accounts and life insurance plans. No matter what your will says, beneficiary designations will override whatever you've stated in your will.
Gresco has a will, but he knows it needs to be updated, and he plans to bring up the subject with Falloon. "We have more to talk about, but we're setting our priorities," Gresco says.
Read more: 10 Things Couples Need to Discuss
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