Divorce and remarriage is a common occurrence in the United
States, and most people put these issues squarely within the family law realm.
However, people who remarry should also carefully consider their estate plans
in order to ensure that all family members in their new “blended family” are
addressed appropriately.
In an article titled “The Second Time Around: Smart Estate
Planning Can Reduce Snags and Maintain Harmony in Your Second Family,”[1]
Fidelity emphasizes the need for clarity and comprehensiveness in estate
planning when dealing with a blended family.
Things to Consider:
1. Obligations with former spouses through
divorce agreement. Many divorce settlements and agreements include
provisions that may impact retirement accounts, savings, and other assets. You
may not be able to change the terms of any of these prior documents, and it’s
important to know where your assets stand before creating a new estate plan.
Your new spouse may not be entitled to a certain asset based on the terms of a
divorce agreement. It’s also important to adjust any prior wills, trusts, or
beneficiary designations from a previous marriage where you can. Otherwise,
your former spouse may be legally entitled to assets that you’d rather your
current spouse receive.
2.
Long-term
goals for support of your spouse and any children or other family members. Because
the complexity of a blended family can create confusion in the estate planning
arena, you and your current spouse should be clear and honest with each other
about where you intend for your assets to go. If there are children from a
prior marriage and you’d like for them to be included in your estate planning
(or not), it’s best to have that conversation with your current spouse so he or
she is in the loop with your long-term goals and plans. Conversations, even
difficult ones, are necessary to ensure that everyone’s wishes are carried out.
3. Guardianship issues. When young
children and former spouses are involved, guardianship issues may become
particularly crucial. Discussing your plans with your current and former spouses
about guardianship of young children is important to ensure that they are taken
care of by the person who will best fit their needs.
4. Marital assets from the second/current
marriage. In order to create a detailed and accurate estate plan in a
blended family, every single asset needs to be categorized in terms of what is
separate or commingled. This can be impacted by anything tied to a previous
marriage like certain trust accounts or even what is set aside for a child from
a previous marriage. The type of marital property law in your state is also
worth considering—this may influence what you can and cannot leave to your
spouse or others. Additionally, the way you title accounts and the way that you
designate beneficiaries in certain policies come into play when determining
what assets are available to you in a remarriage. You want to be sure that all
accounts and policies that are payable or transferable on death go to the
person you want them to go to; if you left a former spouse’s name as
beneficiary on a certain account, he or she may be entitled to those assets,
even if you are remarried.
5. Form of legal documents. Once you and
your spouse have decided what you want and need from an estate plan, choosing
the form in which you address your assets comes into play. If you choose to
draft a will, make sure that it is very specific so that your wishes are
carried out. In a blended family where conflict may exist among widespread
family members, even the smallest things should be addressed to ensure a smooth
execution. Establishing a trust is also something to consider; this allows you
to specifically allocate assets in particular ways so that multiple family
members are taken care of in multiple ways. Trusts offer some degree of
flexibility, and many remarried individuals will use them to set aside assets
for children from a prior marriage.
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