Remarriage brings many changes but, unfortunately, spouses often forget their wills, trusts, and other estate documents that were executed years ago and tucked away. Remarriage requires additional estate planning to help assure that you address your family’s needs.
Protect your new spouse
Remarriage is a good time to update your will and other documents to assure that assets are passed directly to your new spouse without complications. This will also clarify for your family who will receive certain assets, such as your home. Likewise, your financial and medical powers of attorney must be updated so that your former spouse is not making medical or financial decisions on your behalf.
Children
Children from an earlier marriage or relationship also need attention so they are not placed at financial risk. It may be unclear whether your new spouse has the duty to consider their financial needs.
Trusts may assure that your new spouse is protected. A revocable trust is one method that allow financial flexibility for your spouse and children.
A separate marital trust may be created to separate funds for your new spouse instead of leaving one common group of assets for your children and spouse. You can also assure that any remaining assets go to your children after your spouse dies.
You should also utilize gifting strategies to your children during your life if you have a taxable estate. This helps moves assets from your taxable state.
Asset depletion
Assets left to a remarried spouse in a marital trust are typically intended to go to the children after that spouse dies. But those assets may be used up if that spouse needs long-term care or suffers a serious medical problem.
Obtaining a life insurance policy or second to die insurance policy helps avoid leaving children with no assets. You may also designate other assets to leave to your children instead of a marital trust.
First spouse
Beneficiary designations on life insurance policies and individual retirement accounts override anything that is in your will or divorce decree. If you do not change these designations, you may unintentionally pass assets on to your former spouse.
You should also change beneficiary designations on 401(k) plans to avoid causing complications with your divorce. Beneficiary designations on these accounts also need updated if you want your children to receive anything from your insurance or IRAs.
An attorney can help you address your estate goals. Lawyers can also draft documents and prepare a plan that meets your needs.