Remarriages are on the increase, with four of 10 existing marriages now remarriages. That means an estate plan should be created or the current one updated, according to the Cleveland Jewish News in the article “Estate planning documents for second marriages.”
In the article, a couple who each have children from a prior marriage are planning to marry again and blend their families. Consequently, the couple needs to address income taxes, a prenuptial agreement, pension and 401(k) benefits, Social Security, college funding, cost sharing and estate planning documents.
Here’s an example of how important estate planning is for blended families. A couple who has children of their prior marriages get married. Twenty years later, the husband dies. He had wanted to provide for his second wife, so his will stated that all his assets went to his wife, with the understanding that on her death, those assets would go back to his children.
What actually occurred was that his wife lived a long time after he passed, and she simply combined their assets. When she died, the money went to her children, and her husband’s children received nothing. The husband’s children didn’t believe that he meant to do that, but because of the lack of planning, that’s exactly what happened.
What were the alternatives? He could have set up a marital trust that would have held the assets for his second wife on his death, but upon the wife’s passing, would have gone back to his children. The trust document prohibits the wife from transferring the assets to her children.
It’s wonderful to have a verbal agreement with your spouse, but if you don’t set up a formal legal plan, there’s no way to be sure that assets will be distributed as intended.
Another way to ensure that children from a blended family receive what they are intended, is to have an independent person or entity, like a bank or a trust company, oversee a marital trust.
Other important documents include a durable financial power of attorney, durable health care power of attorney and a living will declaration.
Anyone who has been divorced needs to review their estate planning documents to ensure that they reflect their new marital status, especially when they marry again. That is also the time to review beneficiary designations that appear on insurance policies, 401(k)s, pensions, retirement accounts and investment accounts.
An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances, including a remarriage.
You can read more about how our process works, how we can make sure we are a good fit for your needs, and how to get started today right here.
Reference: Cleveland Jewish News (May 7, 2019) “Estate planning documents for second marriages”