Making sure your estate is distributed according to your desires
Estate Planning for the Newly Remarried
by Gary Foreman
Inheritance in a Second Marriage
What Is a Revocable Living Trust?
What Is a Power of Attorney? And Do You Need One?
Second Marriage Finances
You just got remarried. Part of blending your lives together is creating an estate plan, but you're not sure what's important. What should you consider if you're doing an estate plan in a second marriage?
To help us answer that and other questions related to estate plans for those who have been remarried, we contacted Rob Schulz. Mr. Schulz is a Certified Financial Planner® and Registered Investment Advisor. He's also an Adjunct Professor with The University of Texas at Arlington.
Q. What unique pitfalls do 2nd marriage estate plans face?
Mr. Schulz. Second marriage estate plans face a multitude of pitfalls, most of which can be avoided with the execution of a single document, namely the marital agreement. Also known as a pre-nuptial or post-nuptial, the marital agreement tells everybody who owns what. It is signed by both husband and wife and can be as detailed as the situation requires. Most people think of a marital agreement in the context of protection of assets in case of divorce. For second marriages, however, the marital agreement is critical in insuring children from previous marriages are not cut out of any inheritance.
Once a marital agreement has clearly delineated separate assets, husband and wife can specify how those assets are to be passed in their own separate wills. Either you or your financial planner should maintain an up-to-date financial statement that tracks separate assets as they are listed in the marital agreement.
Q. Should parents discuss their plan with adult children? And, if so, how much should they reveal?
Mr. Schulz. I usually think more communication is better. Sharing information with your adult children about your wishes can pave the way not only for smoother probate but also better transition in case of long term care, cognitive impairment, or any emergencies. How much information you share depends on the situation. For information you want your children to have but only after your death, you should write a letter and keep it with your will (don't attach it). The letter can provide biographical information for eulogy or obituaries, Pallbearers and general burial planning guidance, explanations for the way things are split up, and other specific guidance that is not in the will. This letter is not binding. It's just helpful information that will be greatly appreciated when the time comes.
Calculate: What's My Net Worth?
Q. I've heard of people who forgot that their Ex was listed as the beneficiary on things like an IRA. Are there other places that are often overlooked?
Mr. Schulz. Your will does not usually apply to life insurance proceeds, IRAs, or benefits at work. You must ensure the beneficiary information is current and up-to-date or unintended consequences will ensue. Houses and investment accounts can be tricky as well. Homes are usually held Joint Tenancy with Right of Survivorship (JTWROS), but many times in second marriages, this needs to be reviewed along with any investment accounts held in a similar way.
Reviewed April 2017
Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. He's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com. Gary shares his philosophy of money here. You can follow Gary on Twitter. Gary is also available for audio, video or print interviews. For more info see his media page.
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