When Jack and Sarah met through mutual friends, they hit it off immediately. Both had before were married and, besides having a child each, found they had quite a lot in common.
Dinner dates morphed into family-style outings with their children, to the zoo or adventure theme parks. Soon, the couple was talking about taking their relationship to the next level.
According to the Australian Bureau of Statistics, in 2018 over 118,000 marriages took place in Australia. Of those, 15.7 % were second marriages. Many of this number were considered ‘blended’. This means that one or both parents had children from previous relationships.
Marriage breakdown can result in significant financial commitments and family court outcomes. People entering new relationships bring these commitments with them.
The Australian government’s Family Relationships website suggests undertaking negotiation and communication. This is key to resolving these issues before they get out of hand.
Couples, like Jack and Sarah, planning a future together should discuss their financial and legal positions. These discussions should be honest and transparent. This is critical to building trust and keeping finances under control.
When planning a future with your significant other, it is important to consider:
Assets: List what you own and what you have divided with your former spouse. Sometimes, for example, where there was a family business, the asset may be maintained jointly.
Debts: Full disclosure is vital. List credit cards, balances, personal loans, mortgages, how much you’re paying and when, and how, you expect to pay them off. If both of you have debts, you may consider consolidating some of them to make it easier to stay on track.
Children: Provision must be made to support children from previous marriages as well as new family members. Children sharing time between two households must be treated equally.
Their education and recreational activities must be included in household budgeting. This still applies even if your children only live with you part-time.
Savings: It may not be necessary to open joint accounts and investments immediately. Once you consider buying a home (or have other long-term goals), set up a joint account. This will help to manage mortgage payments, rates and insurances.
Additionally, if you’re saving for something you both want (for example, a holiday) discuss opening a dedicated joint account.
Life insurance: Consider whether your insurances need updating. This can also include your nominated beneficiaries. Changes to your lifestyle and family structure can impact your insurance needs. It’s important to review your policies when your family or lifestyle changes.
Superannuation: This does not automatically form part of your estate. In the event of your death, the Australian Tax Office focusses on current spouses and dependents. Setting up a Binding Nomination of Beneficiary ensures your super benefits are directed to the person/persons of your choice.
Wills: Any time your family structure changes, you should update your Will. This is true for all births and deaths as well as marriages and divorces. Estate planning can be complex and difficult, so it’s best to seek professional advice if you’re uncertain.
Managing finances for a blended family can be emotional and tangled. Decisions around the previous relationship – some of which may have been court-imposed – must be included. This can add a layer of complexity.
Our financial advisers will help you look at the big picture and understand how you can structure your affairs. We will ensure that nothing and nobody is forgotten.
A realistic household budget will identify all income and expenses. This will help you get on top of your affairs, stay on track, and look forward to the future.