In a first marriage, the estate planning goals of each spouse are typically aligned: take care of the surviving spouse for as long as he or she lives, and then divide what’s left equally among the children. This also makes sense because most couples jointly own their assets, and estate taxes favor the surviving spouse.
But in a subsequent marriage, or when marrying later in life or after amassing significant wealth, the goals may not be so perfectly aligned. For example, you may want your new husband to enjoy your family’s vacation property during his lifetime, but don’t want his children from a prior relationship to become owners when he passes.
For this reason, the first step for estate planning and remarriage is to consider planning separately. This is particularly true of you or your soon-to-be spouse has significant assets. The decision whether to plan jointly or separately is best made together . Have an honest conversation about your individual estate planning goals. If your goals are sufficiently similar, then you may be able to plan jointly. If they are significantly different, consider having separate attorneys. The farther along in life you are, the more likely you are to have significantly different goals.
Second, if you have significantly more assets than your spouse, and want to keep most of your assets in your familial line, consider using a Qualified Terminal Interest Property, or QTIP, trust. With a QTIP Trust, for example, your spouse could continue to live in your home after you die, but upon his or her death, your children (and not your spouses’) would inherit the property.
Third, consider naming a trust as the beneficiary of your life insurance. The trust will allow you to control when and to whom monies are distributed, so that you can provide for your spouse during their lifetime, and yet keep control over the proceeds. The trust will also protect your spouse from irresponsible spending, creditors, predators, and even estate taxes.
And last, consider getting a prenuptial agreement before you get married. One benefit of a prenup is that it required full financial disclosure prior to signing, so both spouses enter the marriage with a clear picture of the other’s financial record. The agreement also allows the soon-to-be spouses an opportunity to designate what is separate property, which changes how it is transferred after you pass away as well. For this reason, be sure to have your estate planning attorney review your prenuptial agreement before you sign it.
If you are thinking about updating your estate plan and have been remarried, or are considering getting remarried, give me a call today so we can start planning for your new spouse and protect your legacy for your children.
