Married again? Lots of luck!
Keep in mind, though, that you’ll need more than luck in planning your estate! Second marriages make estate-planning much more complicated.
How will you provide for those you love after you’re gone? Should you provide for everyone you love? And how do you transfer wealth in a way that won’t lead to an ugly family feud.
If you haven’t planned your estate yet, here’s Step 1 – TAKE INVENTORY. Write down every asset you own, large and small. Then decide who you’d like to get them after you die. Your new spouse should do this, too – and you should talk about your choices. It may not turn out to be the easiest conversation. But if you can come to an agreement now, it will make things much easier down the line. And it will lessen the chances of tragic disputes and legal challenges. (If you have a prenuptial agreement, these issues may already be addressed.)
You and your new spouse should plan for two eventualities…if you go first, and if he/she goes first.
If you and/or your spouse have children from prior marriages, planning will be more complicated. If you die first, for example, there’s a very real chance that your current spouse won’t provide for your children from past marriages.
How can you prepare for that possibility? You could designate a child as the primary beneficiary of a life insurance policy. You could set up a trust for your kid(s). Or you could place certain real property under joint ownership with a child.
Speaking of beneficiary designations…are yours up to date? Out-of-date beneficiary decisions can lay all your plans to waste. Your plan must reflect your current realities! Be sure to review your designations; you may want to revise beneficiary forms for retirement plans, investment accounts, and insurance policies.
Don’t let poor or incomplete planning – or lack of planning – destroy your wishes for who gets what after you die. Because that can also destroy your family.
First of all, if you’ve been divorced…PAY ATTENTION!
Why? Because in certain cases, divorce may preclude you from changing beneficiaries. What’s the first step you should take if you’re divorced? Bring your divorce decree to an Elder Law attorney, and ask if revising your beneficiaries will violate it. If you can’t make changes in your life insurance policy, for example, and you’ve got a new spouse, you may want to buy another one and make him/her the beneficiary.
Or, you might consider trusts, which can provide for your spouse as well as your kids. Some people draw up a separate property trust to provide for their spouse, while designating most or all of their real property to their children.
Trusts for children can be excellent estate-planning instruments. A trust is a way to transfer wealth without the rest of the world knowing about it, while a will is public. (And, like many other parents who’ve remarried, you might not want all your private details to be made public.) Creditors can’t get the assets in trusts, and trusts are also shielded from spouses of adult children named as heirs. An irrevocable trust is a way to ensure that certain assets go to a parent’s biological children. And trusts generally can’t be undone without permission from beneficiaries – and a judge.
Pre-nuptial agreements allow you to designate personal assets (such as a college savings account) for existing rather than future children. Post-nuptial agreements (drafted after a marriage) can also accomplish this. However, it’s wise to keep in mind that some states don’t view pre-nup and post-nup agreements as legally binding – and sometimes the decision is up to a judge.
Bottom line? If you’re in a second marriage, do your homework. Or, better yet, have an Elder Law attorney do it for you!
