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Changes in Your Marital Status

Your marital status may change when you are middle-aged. Learn how to remain financially sound after losing your spouse.

In this article, you will find:

Divorce
Remarriage

Remarriage

If you and your spouse are willing, you can work together during the divorce process to make sure it has as little negative impact on your finances as possible. Remember that a long, bitter divorce almost always costs more than an amicable one.

An important fact to keep in mind is that alimony (sometimes called separation maintenance) is tax deductible for the person paying and considered taxable income for the person getting it. Child support payments, on the other hand, are neither tax deductible nor considered as taxable income.

One spouse may be directed by the court to help with expenses, other than child support, which are incurred by the other spouse. These could include paying premiums on insurance policies, paying some or all the mortgage, and so forth.

As you can see, divorce is not a simple matter, financially. If it happens to you, be sure to get the professional advice that you need. Keep in mind that you may need a post-divorce budget to help you adjust to financial changes. Plan carefully to avoid unnecessary problems.

Marrying Again

Go Figure

The Stepfamily Association of America reports that nearly 45 percent of all weddings are second marriages for at least one partner.

Should you decide to remarry after a divorce or the death of your spouse, think carefully about how the marriage will affect your finances.

There are many issues to consider. Will you combine finances, or keep them separate? Will you be responsible for contributing toward college expenses for stepchildren? How will you handle estate planning and passing along money to your children? Can you afford to establish a new household while still helping with the expenses of your previous home?

Some financially established couples who marry in middle age decide to keep their finances separate. Others combine all their assets and liabilities. Others compromise by setting up separate, personal savings and checking accounts as well as joint accounts for household use.

Many financial experts recommend that couples who are marrying for the second time around use a prenuptial agreement, particularly if one person has significantly greater assets than the other. A prenuptial agreement (also called a “prenup,” for short), as you probably know, outlines how assets will be divided in the event of death or divorce.

Even if you don't go for a prenup, you and your spouse-to-be should sit down for a serious financial discussion. Take a look at each other's credit reports to be sure there are no surprises. If there are kids involved, discuss matters such as allowance, spending money, and cars. Be sure that each has updated the beneficiary on bank accounts, savings bonds, and IRAs.

Discussions on matters such as these might fly in the face of romance, but there's nothing romantic about learning two months into a marriage that your spouse has tens of thousands of dollars in debt that you knew nothing about.

Another matter you'll need to discuss is your wedding. While you may be thinking only about making the event beautiful and meaningful, you'll need to consider its financial impact, as well.

If you and your spouse-to-be are very well off financially, go ahead and plan away. If it comes down to a choice between a big wedding and his next month's child support payment, however, you'd better start scaling back your plans.

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