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Monday, July 23, 2018

Estate Planning In Second Marriage Situations


            Estate planning is critical in second marriage situations. Meeting or knowing people who are on their second or third marriage isn’t exactly uncommon nowadays. Many of us also know that remarriages entail a lot of adjustments and sometimes complications, especially when there are kids involved. Simply put, blending of two families together can be pretty challenging.

            With all the challenges and concerns on the surface of every remarriage, estate planning is often forgotten or set aside by many couples. But with the merging of two families, concerns and challenges about financial, legal and estate planning multiply.

            The following are some of the issues you should take note of, as explained by Mark Eghrari, and elder law attorney in Long Island, in his article Second Marriage And Estate Planning: 5 Things You May Not Have Considered:

Income and assets that are combined in second marriages may be at risk, if one of you still has financial issues and entanglements with a former spouse. Creditors may come for you to hold you liable of an old debt, as they “are not always bound by divorce settlements,” Mark said. To avoid complications, you may opt to keep you and your spouse’s money separate.

*If you are considering creating a joint trust, you may want to read one of my old blogs: Should I Create a Joint Trust? (Should We Have One Trust or Two?)

You also should understand the status of your properties after remarrying. Mark explains that in a community property state, those you receive before the marriage remain yours, while those you acquire after become co-owned by you and your spouse. On the other hand, “ownership is controlled by titles, registrations, or ownership documents” in a common law state. To help you decide on matters regarding these properties and in connection with your estate plan, you should see professional advice from a lawyer.

A Trust will sufficiently protect assets in case one of the spouses marries again after the other’s death. Protection for the separate assets of spouse’s children may be set up, as preferred.

Complications may happen if a Trust isn’t set up with specific wishes regarding the inheritance of the children. Do the children of the first spouse need to wait for the second spouse to die before they get their inheritance? Does the new spouse get to decide who will inherit the joint assets? All these should be explicitly stated in the Trust, to avoid unintentionally disinheriting your children from your previous marriage.

Whether the surviving spouse be allowed to stay in the home or not is a concern for blended families. What resolves this is again, putting the home in a Trust. According to Mark, many couples do that “for the benefit of the surviving spouse.”

With the different new adjustments in every remarriage, always consider to revise your estate plan (if you already have one) or seek legal advice to set it up. Remember that it isn’t an easy process—you may experience pitfalls in setting up your estate plan in a second marriage—but it is necessary step that no couples of remarriages should overlook.