Remarrying? New Spouse = New Estate Plan
A review of your estate plan is always warranted after a major life change. A new marriage after divorce is no exception. If you have remarried, it is important to make sure your estate plan reflects your current situation. Below are a few problematic situations that can arise if you fail to update your estate plan after remarriage:
Unintentional disinheritance of your new spouse. This can occur if you fail to update your will, trust, or real estate ownership to reflect your intent to distribute assets to your new spouse or to allow your new spouse to live in your home after you pass away. Some state laws may pass your assets to your children rather than your new spouse if you do not specifically provide for distributions to your spouse.
Unintentional disinheritance of your children from a previous relationship. Oftentimes, spouses will leave their assets to each other with the expectation that the surviving spouse will eventually pass along remaining assets to the predeceased spouse’s children upon their death. Unfortunately, without a trust or another protective measure, your children may not inherit as you had previously planned if the surviving spouse alters distributions in their own estate plan.
Depletion of assets prior to the surviving spouse’s death. If a trust is used to pass assets to a surviving spouse with the remainder to pass to the predeceased spouse’s children, there is a risk that the surviving spouse could use up trust assets, often for medical or nursing home expenses, leaving little or nothing for the predeceased spouse’s children. Instead of a trust, you could utilize a life insurance policy payable to your spouse while leaving your other assets to your children to avoid this situation.
Unintentional distribution of assets to former spouse. While a divorce decree typically negates gifts to a former spouse by will, if you fail to remove your former spouse as a beneficiary on retirement accounts, life insurance policies, and the like, your assets could end up passing to your former spouse. In addition to keeping all beneficiary designations up to date, it is important to make sure your financial and medical powers of attorney have been updated to remove any powers granted to a former spouse.
For more information, see this helpful piece by Barron’s detailing potential solutions to these common estate planning mistakes after remarriage.