Getting remarried is an opportunity to update an estate plan
This article looks at three estate planning considerations that people who are remarrying should keep in mind.
According to CNBC, a recent poll found that in 2013 about 40 percent of all marriages involved at least one spouse who was remarrying. Furthermore, about 63 percent of Americans don’t have a will. The combination of remarriage with poor estate planning has the potential to create headaches for those who are on their second – or third or fourth – marriage, especially if they have children from a previous relationship. Below is a look at the estate planning issues people who are getting remarried should consider as they prepare for their wedding day.
Update a will
Most people, unfortunately, don’t have a will. For those who lack a will, starting a new marriage should be taken as the perfect opportunity to make one. However, even those who already have a will should update it as soon as possible. An outdated will may list a former spouse as a beneficiary. Obviously, people who are getting remarried do not want to risk their assets going to a former spouse because of an out-of-date will.
Many people don’t realize that the beneficiaries for some assets, such as life insurance and qualified retirement plans, will have to be updated separately from the will. That’s because beneficiary designations on certain insurance and retirement plans take precedence over what is mentioned in a will. If a life insurance plan lists the beneficiary as an ex-spouse, for example, then the payout from that plan will go to the ex-spouse regardless of what any will may say.
Children from a prior relationship
If one or both spouses in the new marriage have children from a prior relationship then there are special estate planning issues to consider. For example, if, say the husband predeceases the wife and the wife then remarries, then there is a risk that the deceased husband’s assets could become comingled with the assets of the wife’s new spouse. As a result, the deceased husband’s children from his prior marriage may unintentionally get disinherited. As Forbes points out, one way to get around this risk is by putting assets that are meant for one’s children into a trust.
The advantage of a trust is that it can also specify when one’s children are to inherit the assets in the trust. A trust could specify, for example, that one’s children inherit the assets once the biological parent dies or they may have to wait until the other spouse (their step-parent) is deceased as well.
Estate planning help
Estate planning is important for everybody, but especially for those who are remarrying or have blended families. Anybody with an estate planning concern should talk to an attorney as soon as possible. An experienced attorney can help clients with the various estate planning issues that will need to be considered during a remarriage, including with drafting wills, updating designated beneficiaries, and ensuring that one’s children are provided for in the future.