Second marriages can make estate planning more complicated. Why? Because so many fail to recognize the potential conflict and that is: if you plan to provide for your new spouse, who should own your assets after your spouse dies?
The Meridian Star, in “Estate planning after a second marriage” explains that if you and/or your spouse have children from prior marriages, there may issues for each of you. If you pass away first, there is a real possibility that your current spouse won’t provide for your children from past marriages. So to prepare for that possibility, you can make a child the primary beneficiary of a life insurance policy, create a trust for your children, or place certain real property under joint ownership with a child.
There is also a lesson to be learn here for spouses in their first marriage: create your own estate plan so that your assets go to who you want them to should your spouse remarry following your death. In my experience, men are very likely to remarry at the death of their wives so it is especially important for women to plan accordingly.
If you have a written a will, it may require an update. Be extremely specific about which heir gets what and state bequests convincingly. The more convincing your bequest, the less ambiguity and the fewer issues that will arise. Also, update your beneficiary designations for retirement plans, investment accounts, and insurance policies. However, if you’ve been divorced, you may be precluded from changing beneficiaries in certain cases. Talk to a qualified estate planning lawyer. Take a copy of your divorcee decree with you and ask if revising your beneficiary designations will violate it.
You can also take a look at irrevocable trusts, which can be used to provide for your spouse and your kids. Some people establish a separate property trust to provide for their spouse after their death and designate their real property to their children. Parents can also create irrevocable trusts to direct assets to particular children. These can be great estate planning vehicles because: (i) a trust agreement isn’t a public document; (ii) assets within irrevocable trusts are shielded from creditors and from inheritance claims of spouses of the adult children named as heirs; and (iii) an irrevocable trust represents a “finalized” estate planning decision—which guarantees that particular assets transfer to a parent’s biological children. In addition, irrevocable trusts are rarely undone.
Pre-nuptial agreements can also play a role in estate planning, as they let you to designate personal assets for existing rather than future children. Post-nuptial agreements (similar to pre-nups, but drafted after a marriage) can also do this, but some states don’t recognize these types of agreements, and sometimes this is up to a judge.
Be sure to consult with an experienced estate planning attorney. Estates with this level of complexity require professional legal assistance from those with a thorough understanding of estate planning and tax issues. You can learn more about this topic as well as other strategies on our website under the tab entitled: estate planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning. However, proper estate planning is not a do-it-yourself project. Why not call us for a complimentary consultation at 757-259-0707.
Reference: The Meridian Star (September 27, 2015) “Estate planning after a second marriage”