It is quite common for people to get married a second time. However, the complexities of financial and estate planning that arise from getting remarried can be challenging.
Take note of these key considerations for financial, legal, and estate planning
Expenses and ownership in remarriage: In many instances, when a couple decides to remarry, they might unintentionally put their commingled income and assets at stake. This can lead to potential financial risks that could ultimately affect both their financial stability and their relationship. A common strategy among remarried couples is to establish joint accounts, which are used to cover necessary expenses such as mortgage payments, utilities, and groceries. On the other hand, individual accounts are maintained for personal expenses or to pay off any outstanding financial obligations, such as alimony or child support.
Community Property versus Common Law: In a community property state, assets brought into the marriage or obtained individually remain the separate property of each spouse, while assets generated or acquired during the marital union are deemed co-owned by both parties. Conversely, common law states determine ownership based on titles, registrations, or legal documents signifying possession. The fundamental distinction between these legal frameworks lies in the fact that community property states regard both spouses as equal owners of any wealth or property amassed during the marriage, while common law states attribute ownership according to the name(s) documented as the legal owner(s) of the asset in question.
Safeguard against remarriage: In the event of your spouse’s remarriage after your passing, there is a risk of asset commingling. However, a Trust can serve as a protective measure for the assets of both spouses’ children, should that be your preference.
Timing of Inheritance: Have you considered what happens to inheritances meant for the children of your first spouse upon their death? Will they need to wait until the second spouse passes? Creating a Trust can clarify your intentions. If you pass away before your new spouse and you co-own assets, your children from a previous marriage may unintentionally lose their inheritance. Your new spouse would then have the authority to determine the beneficiaries of the jointly-owned assets.
Utilization of Home: If you are part of a blended family, have you considered whether the surviving spouse will be permitted to reside in the home after the first spouse’s death, and if so, for how long? A common strategy is to establish a Trust for the property, ensuring that the surviving spouse can benefit from the home.
If you created your estate plan prior to your second marriage, make sure you revise that plan with your new family in mind. Don’t assume that what you already have in place will carry out your new intentions — because it almost surely will not.