It’s not unusual today to be in a second, or even a third marriage. But when it’s not your first venture into wedded bliss, estate planning issues can get a little more complex.
Things are different for blended families, from step-parenting and scheduling holiday gatherings to financial and estate planning. A recent article in Forbes, “Second Marriage and Estate Planning: 5 Things You May Not Have Considered,” examines key issues that should be kept in mind.
Expenses and ownership. Commingled income and assets may be at risk, since many remarried couples set up joint accounts to pay for living expenses. Keeping money separate may be crucial, if you’re still financially entangled with your ex. Remember that divorce decrees do not necessarily bind creditors. As a result, an ex’s default could leave you responsible for an old debt.
Community Property and Common Law. Make sure that you understand the implications if you reside in a community property state. In those jurisdictions, the assets you bring to the marriage or receive individually will stay yours. However, what you earn or acquire during the marriage is owned equally by both spouses. This can be compared with a common law state. In those states, titles, registrations, or ownership documents control ownership. If you have property in another state, you may need to consider both scenarios. These differences in state property laws show how important it is to work with an experienced estate planning attorney.
Remarriage. If your spouse gets remarried after you pass away, the assets can become commingled. A good option in this situation is a trust to protect assets for each spouse's children, if that is your wish.
Inheritance. Consider what would happen to inheritances for the children of the first spouse to die. Would they be required to wait for the second spouse to die? The best answer is a trust that can give specific instructions in that scenario. If you die before your new spouse, and you own assets jointly, it may effectively disinherit your children from a prior marriage. It may not be your intent, but your new spouse will have the authority to decide who inherits any jointly-owned assets.
Use of the home. When you are in a blended family, you must determine whether the surviving spouse will be allowed to live in the home and for how long. One option is to place the home in a trust for the benefit of the surviving spouse.
Don’t overlook updating your estate plan after you remarry. No matter how great the plan was for your first marriage, it’s no longer applicable. An estate planning attorney will be able to guide you through the issues that are unique to blended families so that your new spouse and children from a prior marriage and children from your current marriage are all protected.
Planning for blended families is extremely common, but it takes an experienced estate planning attorney to design and create an estate plan for this complicated situation. Legacy Counsellors, P.C. has been in practice almost twenty-five years and has drafted estate plans for every type of family. Please contact us today.
Reference: Forbes (June 2, 2017) “Second Marriage and Estate Planning: 5 Things You May Not Have Considered”