Planning After a Second Marriage

Marrying again makes end-of-life planning more involved. How do you provide for everyone you love? Should you provide for everyone you love? How do you arrange to transfer assets and property in a way that won’t hurt feelings?

If you have not starting end-of-life planning, take inventory.
Take a little time to write down all your assets – no matter the size. Who should own these assets after you die? Your spouse should do this too – and you should talk about your preferences. It may be a difficult conversation, but agreement now may preclude family squabbles and legal challenges down the line. You should also consider two scenarios – what happens if you die first and what happens if your spouse dies before you do.

If you and/or your spouse have children from prior marriages, there may be some dilemmas for each of you. When you die, there is a real possibility that your current husband or wife will not elect to provide for your children from past marriages. So what might you do to prepare for that possibility? You might make a child the primary beneficiary of a life insurance policy, or set up a trust for your kid(s), or place certain real property under joint ownership with a child.

If you already have a will, it probably needs revisions.
They could be considerable. You want to be extremely specific about who gets what, and you need to state bequests convincingly, because the more convincing your bequest, the less ambiguity.

How up-to-date are your beneficiary designations?
Out-of-date beneficiary designations will cause problems, so be sure to review them. You may want to revise beneficiary forms for retirement plans, investment accounts, and insurance policies.

As you consider these revisions, pay particular attention if you have been divorced. Divorce may actually preclude you from changing beneficiaries in certain cases so have a lawyer review your divorcee decree. If you are unable to make beneficiary changes to your life insurance policy, you may want to buy another one in consideration of your new spouse.

Consider an irrevocable trust.
An irrevocable trust can be used to provide for your spouse as well as your kids. Some people establish a separate property trust to provide for their spouse after their death while directing most or all of their real property to their children.

Alternately, parents create irrevocable trusts to direct assets to particular children. A trust agreement is a private mechanism for transferring assets. A will is a public document. Assets within irrevocable trusts are shielded from creditors, and also from inheritance claims of spouses of the adult children named as heirs. An irrevocable trust represents a “finalized” estate planning decision, one that ensures that particular assets transfer to a parent’s biological children. Irrevocable trusts are also rarely undone. It typically takes permission from beneficiaries (and a judge) to reverse them.

When planning becomes this complex, it’s important to seek the help of legal, financial, and tax professionals.