Congratulations on finding true love—again! Getting remarried opens the door to so many new and wonderful opportunities. Never mind the tax benefits—you have another chance to build a life with a perfect-for-you partner! And, if you or your new spouse have children—or if you plan to have more children together—you can look forward to growing and merging your families! Of course, every major life milestone requires you update your estate plan, and estate planning for blended families presents its own unique challenges.
When it comes to getting remarried, many people are inclined to keep their estate plans simple, and leave their assets to their spouse. However, when children are involved, this isn’t so straightforward. For example, if you lost your ex-spouse to death, you may not want your new spouse to inherit the assets that once belonged to your previous spouse. Or, if you are remarried but co-parenting with your ex, you may want some of your assets distributed to them, so they can use those assets to continue raising your children.
There are countless considerations, but here are the top mistakes we see in estate planning for blended families.
- Failing to update your will (or draft a new trust). This is the first (and most obvious) step after getting remarried. You wouldn’t want your ex-spouse to inherit your home, car, or other assets, right? However, it’s not always as simple as leaving everything to your new spouse, especially when children are involved. How can you be sure that your new spouse will honor your wishes for your children to inherit your assets after they die? Do they have children from a previous marriage? Do you want their children to inherit any of your assets? These are questions to consider, but the complexity of the matter makes trusts for second marriages a highly viable estate planning tool. Trusts for second marriages will ensure your assets pass down to your new spouse, your children, their children, and any other loved ones exactly as you intend.
- Not updating your beneficiary designations. Updating your will may be obvious, but many people forget about the beneficiary designations listed on their bank accounts, insurance policies, and retirement accounts. We can’t tell you how many times we’ve surprised a client by telling them that their ex-spouse is still listed as the beneficiary on their 401(k) account, and they had no idea. Accounts that use beneficiary designations will not pass through probate, so whoever is named beneficiary will receive those assets immediately after your death—there is no court proceeding to argue or contest this decision.
- Treating all heirs equally. There are countless considerations when it comes to deciding how to distribute your assets between your spouse, children, and loved ones. There is no rule that says you need to treat all heirs equally, and this is especially the case in estate planning for blended families. For example, if you owned your house before your new spouse moved in, you may want the home (or the proceeds from selling the home) to go to your children rather than your spouse. Another example, you may distribute a greater percentage of your assets to your biological children, and leave less for your step-children. Finally, if any of your heirs have addiction issues, gambling issues, or are otherwise irresponsible, you may want to look into trusts for second marriages, as a trust will give you more control over the circumstances under which your assets are distributed. When leaving unequal inheritances, it’s recommended that you communicate with your heirs about your decisions, so there are no hard feelings or resentments after you pass away.
- Not working with an estate planning attorney. When it comes to estate planning for blended families, there is so much to consider. What we’ve discussed here is only brushing the surface. A qualified estate planning attorney will guide you through the process of updating your estate plan—or drafting an estate plan to begin with—ensuring that all of the “what ifs” are addressed, and that every decision has a contingency.
No one wants to pass away and leave their family either with a giant mess to clean up, or hard feelings about who received which of your assets. Updating your estate plan when you get remarried is an important step to ensure you leave a legacy of love, and not of anger and confusion.
Miller Estate & Elder Law can help you plan for the many uncertainties of the future. We offer comprehensive estate planning and elder law services, and can guide you through the process of protecting yourself, your family, and your assets. Contact us today!