A Financial Guide for Stepfamilies
Head off fraught disagreements over who pays for whom by discussing finances before merging families
Cameron Normand had four extra-special reasons to be excited on her wedding day.
She was going to be a stepmom to four children aged 8, 10, 11 and 14.

"I was excited to be a stepmom! I did not have kids on my own, although I did have some understanding of stepfamilies from growing up as part of one," says Normand, who is chief executive of Stepfamily Solutions in Alexandria, Virginia.
Talk over financial matters as soon as you realize you will be becoming a stepparent.
She and her husband didn't hesitate to talk about finances.
"We started to think about financial planning when we got engaged, and then once we were married, we did things like have our wills rewritten and combine accounts," Normand says.
One Family's Solution
Here's a snapshot of how becoming a stepmother affected Normand's finances.
"While we kept our investment accounts separate, we immediately set up joint checking and savings accounts, except for a checking account that my husband uses to pay child support, and we bought a house in both our names," Normand says. "We hired an estate lawyer right after we got married to rework our wills, and we sought guidance from our financial advisor on planning for the future."
One thing they didn't talk about was how much Normand would contribute financially to her four stepchildren.
"We didn't discuss how much I was going to contribute to the kids' gifts, clothes, etc. because we had combined our bank accounts and I was happy to help cover those expenses out of our joint account," Normand explains.
Ten Tips to Avoid Trouble
If you are about to become a stepparent like Normand, here are some important tips to consider.
1. Have financial conversations early. Talk over financial matters as soon as you realize you will be becoming a stepparent.
"If you can clarify your financial picture and planning before marrying or moving in together, it will alleviate a lot of stress down the road. But if you're already knee-deep in stepfamily life, it's never too late to have these discussions," Normand says.
2. Dig deep when it comes to financial matters. Greg Pettys, a Certified Financial Planner and co-author of "The Smart Stepfamily Guide to Financial Planning," suggests these talking points for couples:
- What is your credit score and how much debt do you have?
- Who owns which assets and how are the assets owned?
- Who is going to receive these assets as beneficiary?
- How many accounts should we have and how should we combine incomes to fund these accounts?
- When and how will we change beneficiaries on insurance and investment accounts?
- What are our wishes for our biological children should one spouse predecease the other?
- What are our intentions regarding future inheritances and estate legacies?
3. Use separate financial accounts. You may be married but that doesn't mean a joint account is right for you and your spouse. Keeping separate accounts may simplify the finances in your stepfamily.
"I recommend keeping accounts as separate as possible, especially if you're in a dynamic where your spouse is paying alimony and/or child support — just to keep it clean and be sure you aren't wrapped into anything complicated or unnecessary," Normand says.
4. Make a new budget for your new and bigger family. A brand-new family needs a brand-new budget.
"Stepparents should establish a transparent budget that covers both joint and separate expenses, and clearly outlines who's responsible for costs like child support, school fees and household bills, " says Stephan Shipe, a Certified Financial Planner and founder of Scholar Financial Advising in Winston-Salem, North Carolina.
5. Be clear about financial support. If a stepchild needs money, be realistic about how much you can give. "Prioritize family experiences within the budget and (set) realistic expectations around financial support," Shipe says.
"We started to think about financial planning when we got engaged."
6. Don't forget to update estate planning. Include stepsons and stepdaughters in your new plans. "A common mistake is skipping estate planning, which can easily lead to legal disputes," Shipe says. "Protect everyone's interests by updating wills and naming beneficiaries to account for all family members."
7. Hire the right advisers. Financial and legal matters are complicated; leave that work to professionals. "Estate lawyers and financial planners who understand stepfamily dynamics are well positioned to help you have these conversations and think through how you want to handle your financial decisions," Normand says.
8. Don't be afraid to adjust financial decisions. A financial choice you made early in your marriage might not be appropriate years later. Don't be afraid to change it. Normand decided to use separate accounts from her husband a few years into her marriage.
"It felt like a very invasive process for something that I didn't want or need to be a part of."
"A few years in, there was a court process with his ex, during which discovery was filed and we had to produce documentation for every asset that had my husband's name on it," she said. "(This) included bank accounts, tax returns and properties — and almost all of what he had to produce included my personal information because we had combined so much of our finances."
Normand said that while much of her information was redacted, "it still felt like a very invasive process for something that I didn't want or need to be a part of."
She does keep one joint account with her husband. "We do keep a joint checking account we pay bills out of, but everything else is separate," Normand says. "We go through our finances once a week so we know where everything is going, and we communicate very clearly on what we're spending along the way."
9. Talk over how much you can contribute to all of your stepchildren's expenses. Discuss with your spouse the amount you will be able to contribute to the costs of raising your stepchildren. Go over every detail.
"One of the biggest challenges is determining what financial obligations the stepparent will (or wants to) take on around the stepchildren — like clothes, activities and even school tuition," Normand says. "It's often not discussed until something comes up in real time, which can cause conflict because spouses may have different assumptions around who's paying for what. Money is already a top cause of arguments between partners, but add in the blended family dynamic and it becomes even more complicated."
10. Get health and legal directives for you and your spouse. It is wise to prepare living wills, health care directives and HIPAA releases that make clear how you want to be treated if you are unable to make health care decisions for yourself. "Do you want certain life sustaining treatments and in what circumstances do you not want to be resuscitated?" Pettys asks. Federal law requires medical professionals to have written authorization to share medical information, even with immediate family members.
He also suggests getting power of attorney for finances, "Who will write checks if you are not able?" and power of attorney for health care, "Who will make health care decisions for you if you cannot?"