Second marriages are common-statistics show that a high percentage of divorced and widowed men and women remarry, ranging from 29% for younger folks to 67% for adults between 55 and 64 years old. Regardless of age, having an estate plan in place is a wise choice for anyone to make, but it can be especially important in the case of a second marriage.
This is particularly true if you have children from a prior relationship. Failing to adapt your estate plan to your situation could result in stressful family conflict, and could even result in the accidental disinheritance of your children. Read on to learn about common estate planning problems with second marriages, as well as the steps you can take to make sure that your estate planning goals and your loved ones are protected.
Glenn R. Matecun, Estate Planning & Elder Care Attorney
The most common problems come into play when you have children from a former relationship. Many people who remarry want to balance their estate plan to provide both for their new spouse and their children. However, if you do not plan carefully, it is possible that either your spouse or your children could end up with nothing.
For example, say you add your new spouse’s name on your house and bank accounts. If you pass away before your spouse, your spouse will receive everything and your children will get nothing. Your spouse will have your assets, and will also be able to choose a new beneficiary to receive those assets once they pass away. In this situation, you are bypassing your children altogether (although probably unintentionally). On the other hand, you may leave everything to your children, and your spouse will receive nothing. We have seen tough situations, including a recent case where children evicted their father’s new wife from the home after their father passed away (Unfortunately they felt completely comfortable evicting, in their words, their “evil stepmother.” I’m certain their father would not have approved).
Another issue to consider is whether you want your new spouse to inherit your assets at all. In some remarriages, each spouse may wish to leave their respective assets to their own children. But this can be tricky, because a spouse has inheritance rights even when they are left out of a will (called an “elective share“). This means that even if you do not provide for your spouse in your will, they could still receive a portion of your assets. Fortunately, there are legal strategies that can help you work around this.
What to Do if You’re in a Second Marriage
One of the first steps of estate planning for a second marriage is to have a conversation with your family to set expectations. Before you begin to draft your estate plan, have a discussion with your spouse about your goals, including how you want to involve one another in your plan. You should consider both who and what you are bringing into the marriage, including children and assets you each have. These factors may influence whether you want to commingle your assets or who you may want to provide for in your estate planning documents. Because these conversations can be difficult, you should sit down with an estate planning attorney and a financial advisor who can help guide the discussion.
Creating Your Estate Plan
There are several steps you can take to make sure that your estate planning goals are accomplished. First, you may consider entering into a prenuptial agreement, which is a contract that determines what each individual spouse’s property rights will be during and after the marriage. Note that “after” the marriage could be after one or both spouses die, or in the event the spouses are divorced. In its simplest form, a prenuptial agreement says “what’s mine is mine, and what’s yours is yours.” Then, after the basics, a prenuptial agreement can offer further layers of protection, such as allowing one spouse to reside in the home for life or for a specific period of time after the first spouse’s death, providing for support or life insurance on the death of the first spouse, and setting forth where property will go on the death of one or both spouses, or if the marriage ends by divorce.
You can also include provisions about how you would like to provide for your children during your marriage. A prenuptial agreement is always a smart choice to set expectations, but especially if you and your new spouse decide to keep your finances separate. It is a critical part of your plan if you intend to leave your entire estate to your own children. While most states have laws to protect a spouse’s inheritance rights, a prenuptial agreement allows a spouse to waive those rights.
Another important part of estate planning is updating your beneficiary designations. You may have bank accounts, retirement accounts, or life insurance policies that still list your previous spouse as the beneficiary, meaning your former spouse would arguably receive your assets upon your death. Many states have laws to govern inheritance rights after divorce, but these laws are superseded by certain federal laws, for example inheritance rights relating to your 401k. Carefully plan who your beneficiaries will be. Keep in mind that if your new spouse is your beneficiary when you die, they can choose who they want as their new beneficiary, meaning your children may be left out. The same goes for if you choose to leave your children as the sole beneficiaries.
Don’t forget to consider your house, as well. How your home is titled will determine whether the surviving spouse may continue to live there, and who receives it after you are both gone. For example, do you own your home with your new spouse as “husband and wife” or as “joint tenants with rights of survivorship”? If so, it will pass to your new spouse upon your death. If you want your children to have a right in your home as well, you will need to account for this in your estate plan.
Wills and Trusts
Having a will or trust in place complements a prenuptial agreement and is a key part of ensuring that your assets are distributed according to your wishes. A trust can allow for additional benefits, such as giving you control over how and when your assets are distributed, and avoiding probate court. It is also very common in remarriage situations to provide for the surviving spouse by way of a separate trust. For example, a portion of your estate will be set aside, with the surviving spouse receiving mandatory income distributions, with the ability to tap into the principal under limited circumstances. This allows you to take care of your spouse while at the same time directing where the balance of the assets will go after he or she is gone. If you and your spouse have similar goals, this can make the process smoother. If you have differences in the way you’d like to set up your estate plans, it may be necessary for each of you to have your own estate planning attorney.
A Note on the Medical Side
Advance Directives and HIPAA Authorizations
Many spouses will put their new spouse in charge of carrying out their medical treatment decisions. Consider this scenario: You are lying in intensive care and there is a life-or-death decision to be made. Your new spouse is in charge to the exclusion of your children because of the advance medical directives you have put in place. Maybe this is okay with you, maybe not. But it’s something you should discuss with both your spouse and your children. In addition, whether your spouse or children are in charge of medical decisions on your incapacity, you absolutely need a HIPAA Authorization. This is simply an authorization allowing protected health information to be shared with your spouse and children (or other loved ones), regardless who is in charge of carrying out medical treatment decisions. So, in the above scenario, even if you put your spouse in charge of your medical decisions, your children can still talk with doctors, nurses and other medical professionals without going through their stepparent.
It is important to meet with an experienced estate planning attorney who can prepare a prenuptial agreement and an estate plan that will best address your specific situation. You want to make sure that your will or trust will do what you want it to do, and will be in accordance with your state’s laws. As discussed above, there are common estate planning issues in second marriages that can be prevented with the help of a solid, legally sound estate plan. Taking the time to plan will not only prevent legal complications in the future, but can help minimize family conflict and put your mind at ease today.
About the Author
Glenn Matecun is a Certified Elder Law Attorney* and has helped thousands of families with their estate plans and long-term care planning. Glenn is the author of two books: “Your Not Alone: Living as an Alzheimer’s Caregiver” and “You’re Not Alone: Living With Alzheimer’s Disease.” He is also the host of Senior Law Radio, an educational radio show which focuses on legal issues that affect seniors and their families.
You can get more information and watch Elder Care Whiteboard Videos on Glenn’s website, www.MichiganEstatePlans.com.
*Certified by the National Elder Law Foundation.
Available for Media Interviews:
Or Contact Glen Matecun’s Office Directly: https://www.michiganestateplans.com/contact
Philip Crowley’s Media Ambassador Page: https://www.mediaambassadors.com/glenn-matecun