Are you in a second marriage? Do you or your partner have kids from a prior marriage or relationship? If so, second marriage planning is right for you, so that you can protect your assets and family.
The number of couples who are in second marriages with blended families these days has skyrocketed. Chances are, you’re either in a second marriage or know someone who is.
If you are in a second marriage, completing your estate plan is absolutely critical because your legal needs are unique.
Despite these distinctive needs, couples in second marriages get very little attention from estate planning lawyers. Our firm’s estate planning services – and our Family Legal Planning approach – were created to address and provide solutions to the challenges faced by remarried couples.
Understanding the Unique Challenges Facing Couples in Second Marriages, and Why Traditional Estate Planning is Not Sufficient to Handle These Challenges.
Estate planning for couples in second marriages poses unique challenges for lawyers.
Quite frankly, creating effective estate plans for remarried individuals and couples is hard work for a lawyer. It’s hard because blended families present many challenges that couples in first marriages typically don’t face. Even experienced lawyers must work diligently to craft customized plans around a number of different situations and family members who may be involved.
First Marriage Couples Usually Have “Typical” Estate Planning Wishes
Couple in first marriages usually have the same long-term goals when it comes to their estate planning. Typically, they want to “leave everything to each other,” and then divide equally among their children whatever assets remain.
Further, because most of their property is jointly owned, the surviving spouse automatically owns the assets when the first spouse dies. And, in most instances, they choose each other to make health care decisions and their kids to make those decisions when the other spouse can’t.
If you’re in a second marriage, though, things are usually quite different. You and your spouse may each have children from a prior marriage. You may also have children from your second marriage. You may have property that you own individually, as well as property that you may own with your current spouse. You may also have step-children that you want to share equally (or not share equally) with your own children with respect to the ultimate distribution of your assets.
Remarried partners usually have property from the first marriage that they bring into the second marriage and they may want those assets to go to their own children rather than to step-children. They may also want their share of property that they own with their spouse to go to their own children.
At the same time, each married person will often want to make sure that their spouse has sufficient assets to live on for the remainder of their life if their spouse outlives them, but they may have different goals about how any remaining assets are divided between all the kids after their spouse also dies. They may even have different choices about who makes health care decisions if the other spouse cannot.
Now you can see why the issues begin to “stack up” when you’re preparing estate plans for couples in second marriages.
How is the Estate Planning Approach for Second Marriages Different?
When undertaking second marriage estate planning, the approach has to be different.
For example, assume that a woman was awarded a house in a divorce. If she remarries and adds her new husband to the deed, he will also own the house as a joint tenant.
If the woman then dies without a will or estate plan, her share of the house will then transfer to the husband. If the woman intended that her share of the house go to her children from her first marriage, they would not receive any portion of the house, even though this was clearly not what the woman would have wanted.
Without proper second marriage estate planning, the surviving spouse can leave that house to his own kids and completely disinherit hers! That’s usually not the result that partners in a second marriage want.
Similar problems can arise when it comes to beneficiary designations on life insurance policies, IRAs, and other tax-deferred plans. Many people in second marriages will just name their spouse as the beneficiary on these products with the intent of trying to take care of them after they die. The trouble is that the surviving spouse can then name anyone he or she wants as new beneficiaries or to inherit the proceeds, bypassing the first spouse’s children.
With proper and effective legal planning that is designed specifically for couples in second marriages, these unwanted results can be avoided. Frequently, the use of a specific type of living trust will allow a couple to protect the surviving spouse, but will make sure their long-term goals are met.
Other Estate Planning Challenges that Second Marriage Couples Face
Couples in second marriages also have other issues that a lawyer must work to overcome create an effective legal plan. Here are just a few:
Unresolved Emotional Issues from the First Divorce
Many partners in second marriages carry unresolved emotional issues from the break-up of the first marriage that impact their present estate planning decision making. For many people in second marriages their last involvement with a lawyer was during a contentious divorce.
Suddenly now they’re meeting with an estate planning lawyer, talking about the division of assets and how to financially protect the children. This scenario can cause some agonizing memories from the first divorce to resurface. A remarried partner can easily begin to see this process as adversarial. A “me versus him or her” feeling can arise and put serious stress on the relationship.
A lawyer who focuses on estate planning for couples in second marriages can anticipate the tensions that may arise and will be sensitive to the feelings that each partner will likely experience. A lawyer who has personal experience with cohabiting and living in a second marriage can often act as a better facilitator to help second marriage couples successfully work through the “emotional baggage” to help them achieve their estate planning goals.
Step-Children and the Blended Family Challenge
Another issue remarried couples usually face centers around one or more sets of children from previous relationships.
Very often, remarried people have children from a prior relationship. It’s well known that step-children can be one of the biggest stressors on the relationship of a remarried couple. As a rule, parents have very strong feelings about protecting the financial interests of their biological children. If they have a challenging relationship with their step-children, this feeling becomes incredibly pronounced.
Compounding the “step-child challenge” is when a remarried couple now has a biological child of their own. When this happens, it becomes a classic “blended family.”
Navigating these waters and these sometimes-competing interests can be difficult for a remarried couple. Discussions over how to plan for all the children in a blended family can easily become combative.
A good second marriage estate planning lawyer who has personally faced these challenges is often the best-suited professional to counsel the couple to help them achieve their financial goals. To best deal with these challenges, estate planning for second marriages is often centered around a living trust specifically designed to protect the interests of each partner and all of the children, whether they are a “step” or “biological” child.
Property Brought Into the Second Marriage from the First Marriage
Frequently, spouses in second marriages bring property that they had to fight “tooth and nail” for during the prior divorce. Naturally that spouse has very strong feelings of “ownership” about that piece of property, which can drive second marriage estate planning decisions.
For example, at our firm it’s common to see a wife in a second marriage who “bought out” her ex-spouse’s interest in the house the new couple is living in. Typically, the wife will want to see that house preserved for her children from the first marriage while balancing a desire to have her new husband continue to live in the house if she dies before him.
By using the right type of living trust agreement, a remarried couple can plan for a surviving spouse to live in the house until his death and then ensure that the house will go to her kids from the first marriage.
READY TO BEGIN THE JOURNEY?
Now that you understand some of the unique challenges remarried couples face when doing their legal planning are you ready to begin the journey?
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