Remarriage means revising your estate plans

Money is the No. 1 cause of divorce, and your divorce probably cost you a lot more than you thought it would. You want this new marriage to last as long as you promised in your vows, so you need to plan for your death.

It's easier to take these steps before you tie the knot. But even if you've already remarried, it's not too late to make sure that your estate plan accomplishes exactly what you want with your money in providing for your family.

You can accomplish this by following a three-step process that ensures your estate plan match your goals once you've remarried:

Step 1

Sit down with your spouse-to-be after each of you has made a list of all your assets. Share the lists and discuss how you want your estate wishes carried out.

Determine what financial issues you will handle together as a couple. Are you going to build a new house and each contribute half of the funds? Will you stay in one spouse's home and sell the other? What do you plan to do at retirement? And what does each of you want to have happen at your death and at the death of your spouse? It is critically important to make clear your expectations and desires upfront to avoid any misunderstandings and hard feelings later on.

Make a list of each of your life insurance policies. Include the company, owner, beneficiary, the amount of death benefits, and the kind of policy (individual term or permanent, group policy, etc.).   Remember, insurance is typically a direct beneficiary asset so review who you have listed on your primary beneficiaries.  Make sure to remove former spouses and do not list minor children as beneficiaries as distribution will require court legal guardianships to be established in order to accept the money from insurance providers.

Decide how you'll handle any inheritances. What do you want to have happen to that money?   Inheritances are considered separate property  unless you transmute to community property by commingling or gifting.

Step 2

Now you've got some hard numbers and an idea of what you want to have happen upon your death. Even if you don't own a lot of assets, it's smart to consult an estate-planning attorney, especially if you have children.

Your divorce invalidated your will, so at the very least you'll need a new will. You'll probably also want a new durable power of attorney, living will and health-care proxy, especially if your former spouse had been given power of attorney for you. At this stage, your checklist needs to continue as follows with your attorney's advice:

Consider a prenuptial agreement as a way to protect the assets you're bringing into the marriage for your children, your parents, or other family members. Does one of you expect to make much more money than the other, or is one spouse cutting back his or her outside workload or quitting altogether to take care of the new family? If this is the case, each of you should have separate attorneys to negotiate prenuptial agreements and you should start at least a couple of months before your marriage so no one feels rushed. Don't discuss the prenuptial agreement with your fiancé; it may create bad feelings. Let your attorneys negotiate and then report back to you individually. Many attorneys recommend that the agreements even be signed in each of their own offices.

Look at your current life insurance and retirement plan beneficiaries. Your divorce decree may stipulate who the beneficiary must be, so you won't be able to make your new spouse your beneficiary. Or, now may be the time to split up your retirement plan with your former spouse (if it's possible under your divorce agreement or with the specific type of plan you have), so you can name your new spouse the beneficiary of any future assets.

Consider establishment of a marital trust which has provisions requiring the surviving spouse to create an irrevocable bypass trust to hold 50% of the community property assets.  While the surviving spouse will enjoy the income from the property and remain as Trustee, this is the best tool to ensure preservation of 50% of the deceased spouse’s assets pass on to contingency beneficiaries following the death of the surviving spouse.  This is especially important in blended families with adult children from a prior marriage.

Step 3

Once all of these steps are in place, it's important to communicate to your respective families that you have put your financial house in order. This is especially important with children, who have trouble adjusting to stepparents anyway, and may think that the new stepparent has improper financial motives. Just telling them that their education is taken care of and that you and your new spouse are acting in their best interests will go a long way toward defusing any resentment your children (and sometimes even your parents) may be harboring without telling you.

Many a trust contests are instigated by the surviving spouse’s step-children from their deceased spouse’s former marriage.  Without open communication, they don’t understand why they are not inheriting their parent’s estate now as opposed to upon the death of the surviving spouse.  Review with your attorney tools to preserve your estate for your children from a prior marriage while also sharing your estate with your surviving spouse.

Adjusting to a new marriage is never easy, especially when your first one was not a success. But if you get these financial matters taken care of upfront, you have eased a huge burden for everyone involved.

Comments

[Emily]

Awesome steps!
Hi Jennifer, thanks for sharing your explanations.

[Concerned Daughter]

My Father is a Wealthy Oil Man, My Evil Stepmom will not let us be around him, without her eagle eye watching every move? She didnt even tell us that our Father had a stroke, a pacemaker, Alzimers, and Colon Cancer , We heard it thru the grapevine. What could she be up to? WHy is she so evil towards us? We have gone out of our way each and every time to be nice and loveing to her, yet she still clings to that Mean Old attitude, she has No Freinds, No One Outside of us likes her, she treats everyone meanly! I just dont want her hurting my father, she is 20 years younger than he!

This is one of the Step-Mom's that deserves the Witch Title with a Capital B, instead of W............

Laura Paulason.....
Michigan