Yesterday I did the post on ‘protecting your assets in a second marriage’ – here is the sequel…

Apart from making a pre nuptial agreement, you need to protect the interest of the people around you too. If your parents are alive at the time of your second marriage make sure that their interests are also protected – the pre nup can say that you will support them, you will look after them physically and financially. Similarly your children from the first marriage need to be protected too.

A pre-nuptial agreement is a good start – and along with that if you can incorporate a clause that both of you will not claim each other’s assets in case of a divorce – it will be a better start!  It is, theoretical but practical to assume that in a country where pre nuptials are not exactly mainstream, the pre nup can be challenged in court Litigation can be physically,  mentally and financially draining. If you have gone through a divorce – you know how draining it was. You can avoid this if you add a waiver of rights into your prenup. By signing a waiver of rights, both of you give up the right to any assets (and liabilities too of course) which the other owned before entering the marriage. A waiver of rights is, a necessary precaution that will help you start this new journey feeling secure and protected – something no spouse should want to deny you.

Keep your assets separate

Prenuptial agreements should protect any assets that either of you owned before the marriage. But it is better to remember that a pre nup agreement may not really be enforceable in India. Also in order to make sure that there is a clear division between pre-marital assets and marital assets acquired during the (second) marriage and that your assets are protected if the marriage should end in divorce, you can (MUST) choose to keep your assets separate. This IS EASY to do. Keep your bank account, demat account, etc. separate. Keep proper and accurate (painful, I know) records of your non-marital assets. Keep new acquisitions too in your single name at least for the first 3-5 years of married life.  During the marriage, only spend marital assets on common expenses you two will have and add any money you earn during that time to your marital account rather than your separate one. Even this can take some time – say 6 months after which you can open a joint account. There is no hurry.  In the event of a divorce, your marital assets, which might be evenly distributed in court, will be separated from your non-marital assets.

Set up a trust to protect your assets in case the assets are sizeable

A trust can be created as an alternative to a prenuptial agreement. If both of you are not very comfortable about knowing each persons past financial life,  prefer not to fully disclose your financial net worth or don’t want to ask your partner to sign a prenup – you still need protection, do you not? Trusts can be used in addition to a prenuptial agreement also. Trusts can help you manage your estate and will also protect it from your future spouse and business creditors. Or you can set up a trust and name your children as the beneficiaries.

Make or Revise your will

A further important component of your pre-wedding financial planning is to make / update your will. Update your nominees /beneficiaries to include your to be spouse and your stepchildren, and state which assets you would like to pass on directly to your children from the first marriage. In fact if you got the assets from your husband – and he did not have a will, be more careful. Please go to a well settled lawyer and get all this done – not just by down loading a format from Google!  Decide who will make financial and medical decisions on your behalf – what we call a living will / give a medical power of attorney.

Be honest and disclose any past financial issues and challenges

Make sure to always be honest with your future spouse and expect the same from them in return. This is your chance at marriage and there is your past experience too! Discuss your debt, your assets, credit card habits, spending habits, expenses, your wishes, attitude towards spending concerns bravely, unemotionally and openly.

You should now be familiar with some of the most precautions you can take to protect your assets during your second marriage!!

Just like any marriage, every estate is different – there is no one size fits all solution.