Second Marriage Estate Planning, are you in a second marriage? Do you have kids from a prior relationship living in the house with you?
The number of couples who are in second marriages with blended families these days has skyrocketed.
So, 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 you’re legal needs are so unique. Despite these distinctive needs, couples in second marriages get very little attention from estate planning lawyers. We created the Living Together Law Center to overcome the challenges faced by remarried couples and designed it with second marriage families in mind.
Why Do Couples in Second Marriages have Unique Challenges?
Estate planning for couples in second marriages poses unique challenges for lawyers mainly because of the stage they’ve reached in life. Quite frankly, it’s hard work for a lawyer. It’s so hard because blended families present many challenges that couples in first marriages typically don’t face.
For example, partners in first marriages usually have the same long-term goals when it comes to their estate planning. Typically all they want to do is “leave everything to each other” when the first person dies and then leave whatever is left over equally to the children of their marriage. Most of their property is probably jointly owned which ensures that the survivor owns the asset 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. Each partner may have children from a prior marriage. They also may have their own children from this second marriage.
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.
At the same time, the partners usually want to make sure that the surviving spouse will have enough to live on until they die, but they may have different goals about how any remaining assets are split between all the kids. 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 dealing with second marriage estate planning, the approach has to be different. For example, if a spouse adds her new spouse’s name to the deed of the house that she took out of her first divorce, then they now own it as joint tenants. If she dies first, her share will immediately transfer to her new spouse who now has complete ownership of her home and that surviving spouse can now do whatever he wants with it regardless of what her wishes had been. 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 they may have picked up in the break-up of the first marriage that impacts 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 and 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 in to 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 the Living Together Law Center 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. Often she wants to see that house preserved for her children from the first marriage while balancing a desire to have her new husband be able to 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?