Second marriages can present unique challenges when it comes to estate planning, particularly if you or your new spouse have children from previous marriages. Let's take a look at some of the factors, tools, and strategies to consider when planning for a second marriage.
You've been married before, so you're a little bit older and a whole lot wiser the second (or third) time around. However, this doesn't mean you should throw caution to the wind. While it is hardly the most romantic aspect of planning a life together, many couples should at least discuss a prenuptial agreement. This is especially true if any of the following scenarios apply:
- One of you is giving up a lucrative career to get married
- You or your future spouse owns a business
- Either of you has significant assets and wants to keep them separate from marital assets
- One of you carries significant debt
- There are children from a previous marriage
Review and Update Beneficiary Designations
Did you know that the people you have named as beneficiaries in various retirement and other accounts will generally inherit account assets even if other beneficiaries were named in your Will? Shocker no! Consider the following situation. You got divorced, remarried, and changed your will to make your new wife your primary beneficiary. However, if your ex-wife is still named as beneficiary in your retirement and investment accounts, she will inherit the funds, not your new wife. Beneficiary designations typically trump your Will.
Fortunately, it is relatively easy to make and update beneficiary designations. When you open a retirement account, such as an IRA, the provider generally offers a beneficiary designation form within the account itself. You can name your beneficiaries when you create the account and change your beneficiaries whenever you wish (with one possible exception). As for investment and bank accounts, making beneficiary designations will likely require you to request a transfer on death form. This, too, is easily accomplished.
Protecting Children from a Previous Marriage
If you remarry and do not create an estate plan, your children from the previous marriage will receive nothing. Yes, nothing! Your new spouse could, upon his or her death, leave all of the assets to his or her children from a previous marriage or to his/her new spouse if he/she remarries after you pass away, thereby excluding your children. Conversely, if the majority of your estate is left to your children from a previous marriage, there may not be enough assets remaining to provide for your new spouse or any children you have together. In Florida, you cannot disinherit your spouse. The surviving spouse can elect to take 30% of your estate, plus the homestead.
Updating your estate plan upon remarriage ensures that you take care of your children from the first marriage and your new spouse.
To learn more about planning for second marriages and blended families, contact us at 239-529-8731 to discuss your particular needs and goals.