Financial planning for a successful second marriage

Financially planning for a second marriage can be more complex than with first marriages—especially when there are children from prior marriages. In most marriages, estate planning is based on the assumption that your assets will pass to your spouse, and then to your beneficiaries. But when beneficiaries are the children of only one spouse, different considerations come into play.

Here are some common questions around financial planning for second marriages.

What are prenuptial and post-nuptial agreements, and when should I use one?

Marital property agreements can be entered into either before marriage (prenuptial agreement) or after marriage (post-nuptial agreement). The prenuptial agreement is most common in situations where one or both partners have, or expect to receive, a substantial estate—or if there are children from a prior marriage.

State and federal laws give a surviving spouse the rights to their deceased partner’s property. A prenuptial agreement allows both parties to waive those rights to certain assets or income belonging to the other spouse. Usually, the spouse giving up their rights is compensated, often through insurance.

What’s an example of how part of a prenuptial agreement could work?

Let’s say you own your home, and your spouse will be moving in with you. You may have always planned to leave your home to your children, but your new spouse may want to continue living in the house after you pass. A prenuptial agreement can spell out how long they can continue living there, what costs and maintenance expenses they’re responsible for, and even give them the option to purchase the residence from your estate. And it could specify that, if the house were ever sold, your share of the proceeds would be distributed to your children.

Prenuptial agreements can also be used to spell out the rights and interests of your children, to dictate how tax returns are to be filed, what tax elections are to be made, how gifts are to be made, and if gift splitting is to be used.

What assets generally aren’t covered by a prenuptial agreement?

Your retirement plan. There’s some question whether a waiver of rights to a retirement plan is valid in an agreement signed before marriage. It might be possible, but it’s tricky.

What are the legal requirements for a valid prenuptial agreement?

In many states, each party must have separate counsel and fully discloses all assets and liabilities. It’s a good idea for you both to pull current copies of your credit reports to make sure there are no outstanding accounts, even with no balance, that might include a former spouse.

When the agreement is executed, any wills, insurance policies, retirement plans, and annuities should be reviewed to make sure they conform to the terms of the prenuptial agreement since beneficiary designations for those assets will take precedence over the prenuptial agreement.

What are some estate planning considerations associated with a second marriage?

In some states, divorce or remarriage can partially or fully revoke a preexisting will (unless those events are specifically dictated by the terms of the will). If you have continuing child support or alimony obligations from a prior marriage, these can be addressed by a new will.

If your new spouse and your children don’t get along, separate trusts can be set up in your will to provide for each beneficiary. One of the most useful planning tools is the qualified terminable interest property (QTIP) marital trust. This type of trust allows property to pass to your spouse in a way that qualifies for the marital deduction while still allowing your children to ultimately inherit the property. For the rest of your spouse’s life, they’re entitled to all of the income from the QTIP trust—funded with assets from your estate. Upon their death, any property remaining in the trust passes to the beneficiaries in your will. This allows you to provide for your spouse and leave property to your children.

For tax purposes, it’s often advantageous to leave retirement plan assets to your spouse. However, if you want retirement holdings to go to your children, you can have a QTIP trust named as the beneficiary of the retirement plan. Your spouse would receive distributions from the trust during life, and at their death, the remaining assets would be distributed to your children. Remember that the QTIP trust requires specific language from a legal perspective to accommodate this distribution. Therefore, it should be drafted by an attorney familiar with this type of estate planning need.

If you own a business, you’ll need to plan for that as well. To avoid conflict, you can leave your shares of the company to your spouse and children in two (or more) classes of stock. For example, your spouse could receive preferred stock that pays a fixed dividend, while your children receive common stock, which has more growth potential. A buy-sell agreement could allow your children to buy stock from your spouse, or to allow some beneficiaries to cash out while others remain involved with the business.

What other financial planning issues might come up in second marriages?

Discuss whether to file joint tax returns and who pays any taxes due. Sometimes, both spouses agree to pay their share, but this can get complicated when a tax liability arises, or when one of you has capital losses that offset the other’s capital gains. Further issues concerning annual exclusion gifts, gift-splitting, and use of the applicable gift, and estate and generation-skipping tax exemptions can also arise. If possible, all of these issues can and should be addressed before marriage.

Lastly, both you and your spouse should review beneficiary designations on retirement accounts, life insurance policies, and annuities to ensure appropriate transfer. If a designation requires modification, make sure that the change has occurred and is correct.


Remarriage is a time for both you and your spouse to review and revise your financial and estate plans. New wills should be drafted that take into account the differing needs of children from previous marriages and new spouses. A prenuptial agreement can simplify the planning process by defining the rights and obligations of each other, as well as any children and prior spouses. Since planning for a second marriage can be complex, attorneys who are experienced in both family issues and estate planning should be consulted.

Make sure you start your new life together off on the right foot with thoughtful planning. Talk to your Truist Wealth advisor for help.