In August I published an article on pulling the financial cord on your kids after they graduate. Soon afterward a friend sent me an email, saying I'd missed a major point. For folks like me who are divorced and remarried, when your children graduate and find jobs, not only are they removed from your payroll, oftentimes so is your ex-spouse.
He wondered if I had any advice on the financial issues surrounding a second (or third) marriage, particularly what pitfalls to avoid.
His email opened the proverbial can of worms. Every divorce is unique, but I'm going to share some of my own experiences and the commonsense conclusions I've come to over the course of two marriages.
My ex-wife Sonja and I were married young. We stayed together for over 25 years, but by the time our children left the nest we had our share of issues. Through the “Yellow Pages Fairy,” we found a good marriage counselor, Dr. Frances.
Dr. Frances told us we needed to have realistic expectations. If we worked hard to resolve our issues, we would either renegotiate our relationship and stay together or divorce and part as friends. The latter is exactly what happened.
Just how good of friends?
I met my current wife Jo shortly after Sonja and I divorced. Jo had gone back to college to finish her degree. Sonja decided to do the same thing. At that point, neither lady had met the other.
Then one night Jo came home and announced, “I think I know your ex-wife!”
They had met in a cafeteria line, each carrying the same algebra book. Being “mature ladies” and not 20-somethings, they regularly sought each other out and did their algebra homework together. I showed Jo a photo of Sonja, and sure enough, that was the lady she was spending time with.
I called Sonja to ask her about the meetings, and she said, “Wow! You did good!”
The Worst Way to Get Divorced
Then there's my good friend Val. Val got divorced when his children were young. His ex-wife ended up with primary custody of their kids, and Val agreed to pay child support.
Then Val moved out of state. The judge required his employer to send his child support to the court, and from there it was distributed to his ex-wife. At the end of every year, the court received a copy of Val's W-2, and a judge would raise his child support payments relative to his increasing income.
This went on year after year. On top of it all, Val's divorce decree required that he pay his ex-wife's legal fees, so she had no reason not to keep taking him back to court.
When Val's children came of age he was paying close to $40,000 annually in child support. Val's son confided to me that his mother and stepfather were the ones who had really enjoyed that money.
We were invited to Val's “freedom day” party, and it was a dandy. In the next two months, he bought a new luxury BMW, put an addition onto his home, and converted his old garage into a home theater. The money he spent equaled about five years of child support.
Sad to say, Val passed away unexpectedly. His second wife, who had contributed a lot of money to their marriage, was stuck with the bills. They'd never turned the corner from spenders to savers, and she bore the burden.
Each Spouse Gets Divorced Twice – Legally and Emotionally
A few years after I was divorced, Jo and I took Dr. Frances to dinner. When I compared our happy ending to Val's, she said, “I'll bet Val's ex-wife calls her lawyer about the least little thing, and enjoys knowing her ex-husband will be billed $100 for the phone call.” My comment to her was, “Wow, is it that predictable?”
Dr. Frances went on to explain how the financial and emotional issues in divorce are linked together.
First, the person who initiates the divorce normally gets through the reconciliation process about two years earlier than the other spouse. It takes a couple of years of thinking things through and planning before one partner finally pulls the trigger, so the initiator is way ahead before anyone even utters the word “divorce.” That's why she'd encouraged us to commit to two years of counseling.
Second, each partner goes through two divorces, one legal and one emotional. They do not always take place at the same time.
Val's ex-wife was legally divorced, but her revenge tactics signaled that she wasn't emotionally divorced. Val's spending binge was a good indicator that he wasn't either. Highly charged emotions lead to all sorts of financial problems, and the lawyers are the only ones who win.
Dr. Frances' bottom line was simple. Normally, people who get divorced are trying to improve their lives. Unless both people uncouple financially and emotionally, there will be turmoil for the entire family.
In Jo's case, she was a young mother when she divorced her ex-husband. Her attorney wanted her to go after him “like Dracula and get all the blood.” She finally told him no. They still had a young daughter together, and revenge just didn't make sense. She was right.
Divorce is hard enough, but taking your time to properly uncouple will help you make sound financial choices down the road. Amicable divorce does not have to be an oxymoron.
Diving into a Second Marriage
In a second marriage, it's not uncommon for the new wife to receive child-support payments from her ex-husband while her new husband is sending child support to his ex-wife. It can get confusing and messy very quickly. The need for solid financial planning and sound adult decisions increases with the number of ex-spouses, children, and remarriages involved.
When Jo and I decided to get married, we asked for legal and financial advice from a few experts who also happened to be our friends.
Some of our remarried friends split their bills; each spouse deposited their paycheck into a personal account and then wrote a check to their joint account for their share of the bills. Whatever was left was theirs to do with as they pleased. If that sort of arrangement works for you, then go for it.
Jo and I thought these arrangements sounded like “trial” marriages. We went over our vows together word for word. Either we were willing to take our vows seriously or we shouldn't make the commitment. Fortunately, for us it was an easy decision.
What Happens When You're Gone
I took the stepparenting role very seriously. All of the books on becoming a stepparent emphasize that you don't just marry a new spouse, you marry an entire family. Prepare for it.
We have friends who were inadvertently disinherited even though their father was quite successful. Their mom died, and then their dad remarried. Then, when their father passed away, he left everything to his new wife. When the new wife died, everything went to her children.
That did not sound fair to either of us. I am committed to my marriage, and my job is to provide for Jo during her life. How could we make sure everything was divided fairly after we'd both passed away?
A good attorney friend explained that we could set up revocable trusts, and divide our assets into three groups: his, hers, and ours. Then we could each decide how and when the assets of our trusts would be distributed. He also explained that my revocable trust would become irrevocable when I died, with Jo as the trustee, and vice versa.
Then he then gave us an assignment. Go on a weekend getaway, without any phones and only a couple of yellow legal pads, and talk things out. Put our wishes down, and he'd make it legal.
It was much easier than I thought it would be. We started with the no-brainer items. Jo would inherit part of a family farm that had been in her family for over a century. Of course that should end up with her daughter Holly. We each had an IRA that we'd funded before we'd met. We decided to keep those separate, eventually funneling them down to our respective children.
Since our marriage was just beginning, deciding how to divide assets down the road was actually fairly easy; we really didn’t have that much to start with. We put the structure in place, and 25 years later we are still very comfortable with it.
One major caveat became important. Regardless of who dies first, the primary purpose of each trust is to help provide for the other's well-being. The attorney suggested that we have the trust income go directly to the survivor, but limit when the trustee can tap into the principal. That made sense to us.
Once our trust documents were signed, our attorney insisted we notify our children of exactly what we'd done and why, so that there wouldn't be any surprises. That was good advice.
Twenty-five years later, we still have that arrangement. Our family is truly blended now, and making thoughtful financial decisions from the outset helped make that happen.
Getting married – especially the second time around – is a giant leap of faith, but there are steps you can take to minimize financial headaches and family infighting.
First, you have to be open and honest. Have a no-holds-barred talk with your new spouse right away. You have to live with what you agree on for a long time, so express your concerns up front. As time goes on, you will move from paying the day-to-day bills to planning for retirement. Time goes by quickly, so the sooner you begin working together, the better.
Second, get the best professional advice you can. This is one area where you don't want to skimp. I was lucky to have a darn good marriage counselor and lawyer. They really helped, particularly when it came to things to avoid.
On the Lighter Side
My stepdaughter went to high school with Drew Brees in Austin, TX. I tip my hat to him for breaking Johnny Unitas' record for consecutive games with touchdown passes. We saw him play as a 16-year-old, and what was really impressive wasn't his arm strength, but the incredible accuracy of his passes.
We had a terrific weekend at a car show in Silver Springs, FL, where they still have the glass-bottomed boats. With over 1,000 cool cars and trucks, there were more colors than a package of Life Savers. On Sunday we drove over to EverBank Field in Jacksonville and watched the Bears play the Jaguars. The Bears won big, but the game was 3-3 at the half, and Bear fans were very concerned. EverBank Field is quite impressive – a terrific facility.
A hearty “thank you” to everyone who's taken the time to write to me; I enjoy reading your feedback! If you have a question or want a point clarified, I'd enjoy hearing from you.
As long as I'm writing about sports, here are a couple more questions from my friend Toots:
Why do we sing Take Me Out to the Ball Game when we are already there?
Why are they called “stands” when they are made for sitting?
Until next week…