The Pew Research Center reports (http://www.pewsocialtrends.org/) that four in ten American adults have at least one step-relative, defined as a step-parent, a step-or-half sibling or a step-child, in their family.
While the Pew study says that many step-families operate harmoniously, it also notes that adults "feel a stronger sense of obligation to their biological family members than they do to their step-kin."
That is one reason why blended family finances can get so messy.
Couples planning to blend families often have to make financial arrangements that respect previous relationships with ex-spouses and their families. Issues range from childcare and eldercare to potentially complex matters involving businesses, investment assets and real estate. That's why involving trained experts in step-family financial planning is a must.
Here's a basic checklist of issues and solutions potential spouses and partners should consider:
Start with all cards on the table. Today's first-time marriages or partnerships alone can introduce some staggering financial variables, such as business and inheritance issues, college debt, consumer debt or even past bankruptcies. Couples planning step-families face even more complications. But all couples need to start with a critical first step: sharing personal information with a potential impact on finances.
Start with the following:
Current credit reports and credit scores. Extensive loans or bad credit for one or both partners can endanger future purchasing plans for auto, home or tuition. It's also important to share information about personal or cosigned loans to family and friends.
Assets and liabilities. Potential spouses or partners should know each other's financial assets and liabilities and any issues connected with them. As mentioned above, debt and credit issues may be a problem, but if one spouse has extensive assets, it's important to clarify whether those assets will be shared legally or promised to others.
Legal issues. If divorce, child custody, foreclosure, bankruptcy, or any other civil or criminal legal proceedings are pending against either partner or members of their families, full disclosure is essential.
Business and estate issues. If potential spouses or partners have significant estate or business assets assigned to children, former spouses or family members, those commitments need to be factored into the finances of the planned marriage or partnership.
Bring in professional expertise. Beyond disclosure, it's good to have qualified professionals who have specific expertise with blended families and their many unique issues. Both partners should start by bringing any existing advisors into the discussion.
But if none exist and friends and family members don't have solid suggestions, the following organizations might provide local experts with specific skills in helping step-families plan:
Financial planners. The Association for Financial Counseling, Planning and Education and the Certified Financial Planner Board of Standards are two nationwide organizations that can identify advisors in your area.
Tax advisors. Your state CPA society can suggest qualified personal, business and estate tax advisors in your area.
Estate planners and attorneys. Organizations like the National Association of Estate Planners & Councils and the American College of Trust and Estate Counsel might be able to help.
Address problems before move-in. Most experts tell you it's best to start any new marriage or partnership with a clean slate, or a slate that's as clean as you can make it. That's doubly true with step-families. As many income, asset, debt, child custody, estate and business issues as possible should be identified and solutions put in place before the family is legally joined.
Make a fresh estate plan. Financial experts say it's time to review all money issues whenever you face a major life event, and remarriage or re-partnership certainly qualifies. Even if the individuals have their own separate estate matters in order, step-family issues restart the planning clock on everything.
Plan, or re-plan your retirement. You may have planned a great retirement with a former spouse or on your own, but what if your future spouse hasn't? Whatever step-s you've both taken toward retirement, you need to review your strategies so you can retire comfortably together.
Bottom line: Money issues complicate all relationships. But step-families have unique, detailed planning needs that should be discussed and settled before marriage or move-in.