Second Marriage And Estate Planning: 5 Things You May Not Have Considered
Getting married for a second time is fairly common. But the financial and estate planning issues that result from remarriage can be anything but.
In second marriages the complications and challenges created by blended families multiply.
Here are a few of the financial, legal, and estate planning issues to keep in mind :
- Expenses and ownership. If you and your new spouse have commingled income and assets, those funds may be at risk. Many remarried couples set up joint accounts to pay for expenses like mortgages, utilities and groceries and use individual accounts to pay other bills. Keeping money separate may be important if you are financially entangled with a former spouse. Creditors are not always bound by divorce settlements, so through default you could be responsible for an entire old debt.
- Community Property versus Common Law. In a community property state, what you bring to the marriage or receive individually remains yours, but what you earn or acquire during the marriage is co-owned by both parties. In a common law state, ownership is controlled by titles, registrations, or ownership documents. Our office can help you develop an appropriate estate plan for our state. If you own property out of state, you may have to consider both situations.
- Remarriage protection. If your spouse gets remarried after your death, assets can become commingled. A Trust can protect assets for each spouse’s children, if that is what you wish.
- Inheritance timing. What happens to inheritances for the children of the first spouse to die? Do they wait for the second spouse to die? A Trust spells out your wishes. If you pre-decease your new spouse, and you own assets jointly, you may unintentionally disinherit children from a prior marriage. Your new spouse then gets final say over who inherits jointly-owned assets.
- Use of home. In a blended family, will the second person to die be allowed to live in the home… and for how long? Many couples put the home in a Trust for the benefit of the surviving spouse.
If you created your estate plan prior to your second marriage, make sure you revise that plan with your new family in mind. Don’t assume that what you already have in place will carry out your new intentions — because it almost surely will not.