An estate plan is a perfect solution to making sure that your assets are passed on to your children from a prior marriage- if you make sure that is addressed in your estate plan.
Here are some interesting statistics: the rate of remarriage has decreased over time for all age groups, except those who are 55 and older. In 1960, only 42% of those 55 and older remarried, and in 2013, that number jumped to 57%. About 17% of people who divorce eventually remarry. If you are among those who take that leap of faith and marry for a second (or third) time, you’ll want to be sure to have an estate plan that protects your children from prior marriages, says CNBC in a recent article, “Remarried after having kids? Here are tips to avoid accidentally disinheriting them.”
Many people don’t have even a basic will. The risk can be higher if you have no estate planning when you remarry–your children could unintentionally be disinherited. The older you are when you remarry, the more apt you are to be bringing assets into the marriage, such as retirement savings, life insurance, brokerage accounts, real property, and family heirlooms. Estate planning helps to avoid family conflict over re-distributing assets at your death when you are part of a blended family.
If you die without a will (“intestate”), the state law, often enforced by a surrogate court judge, will decide who receives a share of your estate. Of course, everyone’s situation is different, and some can be more complex than others. However, here are some keys to consider, when rethinking how to make sure your heirs end up with the assets you want them to have.
Account beneficiaries. It’s easy to miss this when you remarry. Update the beneficiary designations on retirement accounts, life insurance policies, and other accounts. This designation supersedes any intention stated in your will.
Your home. Remarriage frequently involves a jointly-owned home. Depending on state law and how the property is titled, your intention for your children to inherit your share of it could be thwarted. If the house is deeded as “joint tenancy with right of survivorship” or “tenancy by the entirety,” the property typically automatically belongs to the surviving spouse, regardless of what your will says. If you own the house in “tenancy in common,” you can leave your share to a person other than your spouse, if you want.
Your personal property. If you want your children to get some particular items when you pass away, be as detailed as possible in your will, so there is no room for confusion.
Power of Attorney and Health Care Proxy. Select someone to handle your finances, if you reach a stage where you can’t. A durable power of attorney for your finances allows that person to be in charge of paying bills and filing tax returns. A healthcare proxy permits the named person to make important health-care decisions, if you are unable.
Living Will. This states your wishes if you’re placed on life support or suffer from a terminal condition. It helps guide your proxy’s decision-making, and if you have no one named, your doctors must follow your wishes in that document.
This starts with a conversation with your spouse, your children, and your estate planning attorney. Make sure that your will reflects your wishes. Don’t leave it to chance, or hope that your kids will somehow work it out with your spouse or their stepsiblings. Put it in writing, and make it legally enforceable with an estate planning attorney. Grimaldi Yeung Law Group welcomes the opportunity to work with you and your family.