Contemplating A Second Walk Down the Aisle: Better Update Your Estate Plan!
If you are in a second marriage or planning another trip down the aisle, then estate planning can get complicated very fast. You probably want to provide for your current spouse but not inadvertently benefit your former spouse. If you have children from either marriage, then juggling their interests can be a challenge.
The first step in this process is to sit down and review your estate plan. (If you do not have an estate plan, then contact an attorney). Have you updated your trust, will and beneficiary designations to name your current spouse?
The next step is to assess your financial situation and think about how you want to provide for your various family members. For example, do you want to provide for all children equally? Will you favor biological children differently from step-children? Are children from the first marriage significantly older from children of the second marriage?
If so, their needs likely will be different. For instance, if a child from the first marriage or relationship is in college, then the child may need more financial support than a child from the second marriage living at home. Conversely, if your older children are financially secure or independent, then they may need less help than a younger child.
Be sure and discuss your plans with your current spouse and with your children from both marriages. If you decide to treat your family members differently, then it is important to put your reasoning in writing so as to avoid hurt feelings or disputes over your estate when you are gone.
Trusts can offer flexibility and efficiency to determine how and when your wealth will be shared with your beneficiaries. For example, you might want to establish one trust for your current spouse and his or her children and a separate trust for your children from a prior marriage or relationship.
However, be aware of one important fact: If you leave all your wealth to your current spouse outright, then there is nothing to prevent him or her from spending it all or leaving it to some else, effectively disinheriting your children. To avoid this result, you can create a trust that provides income from your current spouse while preserving the principal for your children.
Trusts can be an effective tool if you have children from a prior marriage who are minors. A parent can establish a trust for a minor and can choose the trustee who can control distributions to or on behalf of your children. This approach allows you to remove the prior spouse from the equation.
Planning is important. The time to plan is now while you are able!