Tag: Blended Families

According to the U.S. Bureau of Census, more than 50% of American families are remarried or re-coupled, and every day, more than 1,300 new stepfamilies form.

If you’re part of a blended family, you’re certainly not alone. It can be a rewarding process, but it’s also challenging and requires patience. If you approach it correctly, the result can be a strong, bonded, blended family that offers place for everyone. In order to get there though, you’ll need a clear plan, open and honest communication, boundaries, and transparency about essential things.

As you look at finances in a blended family, you’ll want to take the same approach. It’s critical that you stay open and honest, and forge ahead with a strong financial plan that protects each other’s existing families. To help you navigate these new waters, here are a few, helpful tips.

Outline A Clear Plan That Puts “Togetherness” First

First, sit down sit down with your partner to brainstorm the best pathway forward. Think about your financial plan from the point of view of what you will do together and for each other. Some initial questions to answer:

• Where will children live?
• Who has primary custody? What if that were to change?
• What do you want your lives to look like?

Answering these big picture questions can help you get on the same page with your partner. Together, you’ll create a vision for how your blended family will work. Be upfront on what each of you needs to have enough time and resources for your children and one another.

Map Out Your Financial Goals And A Path To Get There

Next, list out your goals, priorities, and concerns for your families finances. During this time, be honest and open about every aspect of your financial life. This conversation can also be much easier to have with a CFP® Professional who can facilitate and help you answer these sometime difficult questions. You’ll want to cover topics, like:

• How you will pay shared household bills
• Who will pay what expenses for children
• What your financial expectations are of each other

You’ll also want to review:

• Existing bills
• Previous credit card balances
• Loan payments
• Mortgages and leases
• Tuition payments
• Alimony and child support expenses

It’s important to disclose all financial information with your partner, including any agreements with an ex-spouse over future payments, the sale of a property, or any other financial arrangements.

Finally, whether you are sharing assets or not, it’s wise to be upfront about your retirement fund assets, brokerage accounts, education savings plans, and any valuable property you own. Also, disclose your credit rating, so you can make informed decisions as a couple about the best way to manage debt or large purchases. Remember that your credit scores are a big part of that.

Discuss How You Will Manage Expenses

Everyone does this differently, and there’s no right or wrong way. Depending on your income, one partner may pay all of the expenses, or you may choose to split them according to one another’s income. Some questions to ask as you form your budget:

• What are the most important things to spend money on?
• Where do you want to vacation?
• How often do you buy new things?
• What are you anticipated utility costs?
• What are monthly expenses for kids’ activities and sports?

Whatever spending arrangement you decide on, you’ll need to figure out an equitable way to pay for the children’s expenses. Your goal is to ensure that all the children are treated fairly and feel loved.

Plan For The Unexpected And The Protection Of Your Estate

It’s also helpful to brainstorm a few “what ifs.” For example, ask one another, what will happen if one of you loses a job? Can you support the family is one partner passes away or will life insurance be beneficial? Answering all of these questions can help keep you united as you transition from “yours” and “mine” to “ours.”

The next step is to formalize an estate plan. An estate plan is critical for any family, but even more so for a blended family. Think through what each partner’s children will receive from their separate estates, and then if any bequests will be made from a joint estate. It’s important to work with a trusted estate planning lawyer to document your wishes. Then carry out the plan by ensuring that all accounts are held in the correct names, beneficiaries are updated, and trusts are set up where necessary.

Overall, remember that you can create a smooth financial plan for your blended family. We know that these can be difficult conversations to have but working with a financial advisor can help you be successful. Don’t delay—the earlier you create a plan for your blended family, the better.

Lake Road Advisors, a Fee-Only, independent financial planning firm with offices in Corning, NY, Ithaca, NY and Portland, OR works with clients virtually all across the country. Paul Sydlansky, the founder of Lake Road Advisors LLC, has worked in the financial services industry for 20+ years. Prior to founding Lake Road Advisors, Paul worked at Morgan Stanley in Manhattan for 13 years. While at Morgan Stanley, Paul was a senior-level manager within the Institutional Equities Department. In 2018 he was named to Investopedia’s Top 100 Financial Advisors list. Paul received a Bachelor’s degree in Economics from Marist College and holds an MBA from New York University Leonard N. Stern School of Business. Paul is a CERTIFIED FINANCIAL PLANNER™ and a member of the National Association of Personal Financial Advisors (NAPFA) and the XY Planning Network (XYPN).