Marrying again makes estate planning more involved. How do you provide for everyone you love? Should you provide for everyone you love? How do you arrange to transfer wealth in a way that wonâ€™t hurt the feelings of certain heirs? If you have not planned your estate yet, take inventory. Spend a half-hour and jot down the assets you own, major and minor. Who should own these assets after you die? Your spouse should do this, too â€“ and you should talk about your preferences. It may not turn out to be the easiest conversation, but agreement now may preclude family squabbles and legal challenges down the line. You should also consider two scenarios â€“ what happens if you die first, and what happens if your spouse dies before you do.
The Meridian Star, in â€œEstate planning after a second marriageâ€ explains that if you and/or your spouse have children from prior marriages, there may issues for each of you. If you pass away first, there is a real possibility that your current spouse wonâ€™t provide for your children from past marriages. So to prepare for that possibility, you can make a child the primary beneficiary of a life insurance policy, create a trust for your children, or place certain real property under joint ownership with a child.
If you have a written a will, it may require an update. Be extremely specific about which heir gets what and state bequests convincingly. The more convincing your bequest, the less ambiguity and the fewer issues that will arise. Also, update your beneficiary designations for retirement plans, investment accounts, and insurance policies. However, if youâ€™ve been divorced, you may be precluded from changing beneficiaries in certain cases. Talk to a qualified estate planning lawyer. Take a copy of your divorcee decree with you and ask if revising your beneficiary designations will violate it.
You can also take a look at irrevocable trusts, which can be used to provide for your spouse and your kids. Some people establish a separate property trust to provide for their spouse after their death and designate their real property to their children. Parents can also create irrevocable trusts to direct assets to particular children. These can be great estate planning vehicles because: (i) a trust agreement isnâ€™t a public document; (ii) assets within irrevocable trusts are shielded from creditors and from inheritance claims of spouses of the adult children named as heirs; and (iii) an irrevocable trust represents a â€œfinalizedâ€ estate planning decisionâ€”which guarantees that particular assets transfer to a parentâ€™s biological children. In addition, irrevocable trusts are rarely undone.
Pre-nuptial agreements can also play a role in estate planning, as they let you to designate personal assets for existing rather than future children. Post-nuptial agreements(similar to pre-nups, but drafted after a marriage) can also do this, but some states donâ€™t recognize these types of agreements, and sometimes this is up to a judge.
Be sure to consult with an experienced estate planning attorney. Estates with this level of complexity require professional legal assistance from those with a thorough understanding of estate planning and tax issues.
For more information on this and other elder law and estate planning subjects, contact Idaho Estate Planning and schedule a consultation. Remember, good planning is no accident.