Many people view a second marriage as a fresh start and a new chance at happiness. If you’re planning to take another walk down the aisle, it’s critical to take the time to review and, if necessary, revise your estate plan.
Will your current estate plan become outdated?
Most likely the answer is yes if you had drafted your estate plan while still in your first marriage. Given your current circumstances, you’ll probably want to consider whether you’ve adequately provided for your new spouse and not inadvertently benefited your former spouse. And if you have children, juggling their interests with those of your current and, if appropriate, former spouse can be a challenge.
Thus, it’s critical to review your will, trusts, health care directives, powers of attorney and other estate planning documents to ensure that your wishes are carried out.
Should you consider a prenuptial agreement?
If you have children from your previous marriage, you may wish to leave the bulk of your estate to them, particularly if your new spouse is financially independent. The laws in most states, however, make it difficult to “disinherit” your spouse.
For example, many states provide a surviving spouse with an “elective share” — typically between one-third and one-half — of the other spouse’s estate, regardless of the terms of his or her will or living trust.
You can use a prenuptial agreement to waive your respective rights to each other’s property. These agreements can also be used to serve a variety of other purposes, including retaining control of a business and defining premarital assets and debt.
Are your beneficiary designations up to date?
Determine whether your former spouse is still named as beneficiary of any life insurance policies, annuities or retirement plans and, if appropriate, update the beneficiary designations. Also, keep in mind that, if you’ve named any minor children from your previous marriage as beneficiaries, and you unexpectedly die, your former spouse will likely become their legal guardian and gain control over their property. If this scenario is unacceptable, consider designating a trust as beneficiary for your child’s benefit.
Have you established any irrevocable trusts that name your former spouse as a beneficiary? If so, do the trusts provide that his or her rights terminate automatically in the event of divorce?
Also, find out whether your divorce decree grants your former spouse any rights with respect to life insurance, retirement plans or other assets. If the answer is yes, your ability to update certain beneficiary designations may be limited.
As you name new beneficiaries, be aware that your new spouse may have mandatory rights to certain assets, such as qualified retirement plans. If you wish to name someone else as beneficiary — a child from your previous marriage, for example — you’ll have to ask your new spouse to waive these rights in writing.
Avoiding unintended outcomes
If you’re planning your second trip down the aisle, or have already taken that trip, now is the time to reexamine your estate plan. As currently written, your estate plan may not represent your new circumstances. We can help you avoid any unintended outcomes.