Dawn Humphrey, First Vice President, Regional Financial Planner, SunTrust
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[Host] A second marriage is a new beginning, and a major part of starting your new life together is updating your financial plan. Dawn Humphrey, a Financial Planner with SunTrust Private Wealth Management and SunTrust Investment Services, outlines the steps you can take to financially prepare for a second marriage.
[Dawn Humphrey] One of the things that we always talk about is your financial past and your objectives for your financial future, and you know, what good financial habits got you to where you are today, and what are your objectives, particularly in a second marriage for your new partnership. So, some of the things that you come across for many clients when they're entering into a second marriage is that they have maybe children from a previous marriage or they have legal obligations, such as alimony. So, managing cash flow and whether you should have joint accounts, updating all of your estate documents, beneficiaries—all of those things become very important.
[Host] For clients who are about to enter into their second marriage or have already exchanged vows, Humphrey recommends they consider a prenuptial or postnuptial agreement.
[Humphrey] It addresses all of the assets that they have currently and what they have brought into the marriage and how those assets are addressed in the event of death or divorce. It also requires your parties to have counsel typically, and so each of our clients will have their own attorney, and we go through a process where they actually itemize their balance sheets and really kind of address each asset and what the thoughts are around that.
[Host] Protection is a primary reason to consider these agreements. Humphrey recalls a specific story with one of her clients.
[Humphrey] I am currently working with a professional couple, and both of them are very successful. They've got great careers. They each have very healthy balance sheets, and one of the things that we're looking at is the husband actually has children from a previous marriage, but this is the wife's first marriage. And, you know, one of the considerations for her is that she wants to start a family, but in order to do so, she'll probably leave her career and future earnings on the sidelines. So what we wanted to do was make sure that we look at that and financially she's protected in many ways, and so through the prenuptial agreement, we're able to address all of those.
[Host] Beyond prenuptial and postnuptial agreements, Humphrey says it’s important to update your will.
[Humphrey] When we work with our clients, we make sure—particularly when they have any kind of life event or a marriage in particular, that we update those wills.
One of the most common tools that we use in estate planning and particularly for second marriages, is something called a QTIP trust, and that is incorporated in your will and funded at death. What that does is it allows--so there's the deceased spouse to fund a trust for the surviving spouse, but then it also enumerates who the remainder beneficiaries are going to be so that you can't disinherit, for instance, your kids from a first marriage.
[Host] Because tying the knot is an emotional life event, it’s easy to lose sight of key financial considerations. Here are some big ones Humphrey says we can’t forget.
[Humphrey] Some of the things that you really want to consider are residences. You know, when you have two households that are merging, you know, whose house are you going to live in? Are you gonna sell both and have a new one?
Other things that you have to do is really update beneficiaries. So your beneficiary designation forms on retirement plans and life insurance. You always want to go back and double check that they are indeed the way you want them to be.
And then you might want to discuss risk tolerance. The risk tolerance, you know, for investments or, you know, for other retirement savings. You may have very different ideas, and you want to make sure that you're collaborative in that aspect as well. Finally, one of the big things that we see very often is with business owners.
I'm working with a client right now, and he is in a second marriage. He wants to leave his business to his two children that are actually working in the business, and so what we're doing now with them is we are updating their buy-sell, and then we're also making provisions for his second wife because she will eventually need income from the business if something were to happen to him. So what we've done is we've used an insurance solution, and then in addition to that, we've had her sign the buy-sell as well so that all parties are aware of what would happen upon the husband's demise.
[Host]Thanks for all the great information today, Dawn. For more information, contact your SunTrust advisor or visit us online at SunTrust.com/wealth. If you enjoyed this podcast, please consider subscribing to the Private Wealth Management Podcast Channel via iTunes, or download our podcast app in the Google Play Store, by searching SunTrust.
Dawn Humphrey, a Financial Planner with SunTrust Private Wealth Management and SunTrust Investment Services, discusses the steps you can take to financially prepare for a second marriage.
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