Your second marriage requires revisiting your estate plan.
You have found love again.
As your prepare for your second wedding, do not neglect your estate planning.
Although your wedding day will be filled with memories and loved ones, your estate plan will impact the future of your new family.
According to a recent Mondaq article titled “Value of an Estate Plan Review With a Second Marriage,” there are many aspects of your estate plan you should discuss with your future husband or wife.
Where should you start?
Inventory the assets and liabilities each of you will be bringing into the marriage.
This could include listing savings accounts, investments, checking accounts, real estate, pensions, tax deferred retirement accounts, and any personal assets, let alone alimony, child support, and outstanding loan balances.
Next you should review each of your previously executed estate planning documents.
These will include your wills, trusts, powers of attorney, and health care directives.
Remove your former spouse from these documents as well as any beneficiary designations!
Failing to do so means your ex could inherit your assets and be in line to make your medical decisions should you become incapacitated.
In addition to removing your ex-spouse from your documents, you should discuss with your future spouse how each of you will factor into the estate plan of the other.
As you retitle your assets, you may set yourself up to be liable for the debts your partner is bringing into your second marriage.
In this instance, it may be wise to keep your accounts separate.
If one of you is coming into this second marriage with significantly greater assets or with children from a previous marriage, you may want to include a prenuptial agreement.
This agreement can waive respective rights to the property of the other, serve to retain control of business interests, and define assets and responsibility for any debts prior to marriage.
When it comes to children, do you want only your biological children to inherit or would you like to divide assets among the step-children from your second marriage?
A separate marital trust can help you leave a share of your assets to your new spouse if you die and still provide such assets for your children upon the death of your new spouse.
What should you do with an IRA?
It may be wise to divide your IRAs between your spouse and your children.
Beneficiary designations should be given specific attention when it comes to estate planning.
Your new spouse may have rights to certain assets under the laws of your state, unless properly waived per the prenuptial agreement after the wedding.
There also may be tax implications.
For example, your spouse is the only individual who can inherit a Health Savings Account from you without paying income taxes on it.
Consequently, if your children were named as beneficiaries, the account would become taxable.
Although planning a second marriage can be both exciting and overwhelming, prioritize discussing and completing your estate plan prior to walking down the aisle.
As I tell my clients: “Love may be blind, but go into marriage with both eyes wide open.”
Reference: Mondaq (March 2, 2021) “Value of an Estate Plan Review With a Second Marriage”