Getting married may feel like a fresh start but it is important to consider how a second, or subsequent marriage can impact your financial plan and how you manage your estate. If there are children from one or both parents’ marriages things may get a bit more complicated. A spouse may feel torn between the needs of their soon-to-be-spouse and the needs of their children from an earlier marriage. It’s crucial for the couple to not only discuss their estate planning ideas with one another but also with an experienced and knowledgeable estate planner.
Estate Planning Considerations for a Second Marriage
There are many questions that can arise in regards to updating individual estate plans or creating a new joint one. Some important questions to ask yourself when estate planning in a second marriage include:
Do you plan to have additional children together? If so, what assets will be preserved for them?
Are there assets you will continue to hold individually?
Are you or your spouse bringing any debts into the marriage or will you incur new debts after the marriage?
Do each of you have a will that will need to be updated or will you establish a joint will?
Are there assets that will need to be retitled in both of your names like a first home or vacation home?
It is important to ask each other these kinds of questions early to help get a sense of each other’s perspective on estate planning. It’s ideal to have these kinds of discussions before the second marriage takes place to minimize any potential conflicts. This can also help you decide if a prenuptial agreement may be necessary to protect your individual financial interests.
Preserving Your Children’s Inheritances
Bringing children, minors or adults, into your estate planning efforts can be tricky when you’re getting remarried. For instance, you may wish to leave certain assets to your children while your new spouse may wish for your assets to be equally distributed among his or her children as well. Both spouses will likely bring different assets to the second marriage, like as real estate, bank accounts, retirement accounts, and life insurance policies.
There may also be questions regarding how these assets will be divided up after one or both spouses are deceased. Each spouse may want to ensure certain assets go specifically to their children, while also ensuring the surviving spouse will have enough income. You may need to update your will or set up a separate marital trust to ensure your spouse receives the share of your assets that you want them to have while preserving your children’s inheritance.
Naming Your Beneficiaries
You may need to update assets that already have a named beneficiary when you’re remarrying. For example, if you named your previous spouse as beneficiary to your 401k, life insurance policy, or individual retirement account you will most likely want to change the beneficiary to your new spouse or to a trust you have set up. This way your former spouse can’t collect on those assets.
If you own real estate property with a spouse in a second marriage, you might want to allow your spouse to live in the house for the rest of their life if they survive you. You may also consider that you wish for the house to belong to your children from your first marriage once your spouse has died. You can achieve both of these goals by putting the property in a trust that allows your spouse to live in it, but does not permit them to sell the house. This way, if something happens to you, your spouse won’t automatically assume full ownership of the property.
Get Started on Your Estate Planning
Deciding what is fair in a second marriage and estate planning can be tricky and it’s essential to start the conversation early. We can provide you with the personalized guidance you need – we’ll help you build a solid plan to make sure your loved one’s wishes are fulfilled. Hunsberger Dunn Law offers free one-hour consultations to answer any business or estate planning questions you may have. Give us a call at 714-663-8000.