Frank Sinatra famously sang that “Love is lovelier the second time around”. And for those who find love again after being widowed or divorced, that sentiment likely rings true.
At One Financial Services, we know that what is also true is that estate planning becomes even more important the second time around. Navigating the ins and outs of a blended and/or second family can be very tricky.
Here are some important items to consider if you marry again…
Check all your beneficiary designations. The legal community is rife with stories of an elated first spouse and a stunned second one when discovering the deceased spouse never updated the beneficiary of a 401K or life insurance policy.
This applies not only to specific designations but also to joint accounts or accounts held in trust. Make sure your former spouse is removed from all financial and property documents unless otherwise mandated by a divorce decree.
Update your will. You want to leave specific instructions as to who should receive the rest of your assets including your home. Keep in mind that should the spouse of a second marriage receive all the assets upon your passing with the understanding that they will then pass them along to your children from a first marriage, there is nothing to prevent them from writing a new will cutting out your children once you’re gone.
If legal in your state, you may want to consider a “will contract” that will prevent the surviving spouse from deviating from your wishes and altering your will.
You also should consider who will receive family heirlooms, even if their value is largely sentimental. You may not want your spouse's family to inherit your grandmother’s China service or your grandfather’s pocket watch. You can spell out those wishes in a codicil to your will or a letter of instruction to your executor.
Treating All Heirs Individually. When considering how to distribute your estate, it’s important to consider each heir’s individual needs. One may be extremely responsible and able to manage whatever they inherit, while another may have shown you that the money would disappear on a whim.
You could be comfortable having the first heir directly inherit while you may need to establish a trust for the second one providing for them to receive regular distributions while the trust protects the asset from creditors.
Do use professionals. Your estate represents your life’s work and a legacy for your family, whether from a first marriage, a second marriage, or both, it is a situation that will likely involve ex-spouses, blended families, commingled assets, and perhaps even elderly parents. At One Financial Service, we can work alongside your legal counsel and offer the advice of our team of estate planning professionals to help work towards protecting and providing care for those you love.