27 Jan The Impact of Marriage and Remarriage on Estate Planning

Marriage is a significant milestone that impacts not only personal relationships but also financial and legal planning. One of the areas most affected by marriage, and remarriage, is estate planning. Understanding how these life events influence your estate plan is crucial to ensure that your assets are protected and distributed according to your wishes.

Marriage and Estate Planning: What Changes?

When you get married, your legal rights and responsibilities change, and this includes your estate planning documents. Whether you are creating an estate plan for the first time or updating an existing one, here are some key areas to consider:

1. Spousal Inheritance Rights: In most states, a surviving spouse has the right to inherit a portion of the deceased spouse’s estate, even if the will states otherwise. This is known as the “elective share” and can range from one-third to one-half of the estate. Therefore, if you want to control how your assets are distributed, it’s essential to update your will or trust after marriage to reflect your intentions.
2. Beneficiary Designations: Marriage often leads to a change in beneficiary designations for life insurance policies, retirement accounts, and payable-on-death accounts. It’s common to name your spouse as the primary beneficiary, but if this is not your intention, you need to update these designations promptly. Failure to do so could result in assets passing to unintended beneficiaries.
3. Joint Ownership of Assets: Many married couples choose to hold property and financial accounts jointly. Joint ownership with right of survivorship means that when one spouse dies, the surviving spouse automatically inherits the asset, bypassing the probate process. While this can simplify asset transfer, it may not always align with the rest of your estate plan, especially if you have children from a previous marriage or specific bequests in mind.

Remarriage and Estate Planning: Unique Considerations

Remarriage introduces additional complexities into the estate planning process, particularly if one or both spouses have children from previous relationships. Here are some important factors to take into account:

1. Blended Families and Inheritance: In a blended family, it’s important to be clear about how you want your assets distributed. If you do not specify in your will or trust, state laws may automatically pass assets to your new spouse, leaving children from a previous marriage without their intended inheritance. Consider setting up a trust to ensure your children are provided for while still supporting your new spouse.
2. Prenuptial and Postnuptial Agreements: A prenuptial or postnuptial agreement can help clarify asset division and inheritance rights in the event of divorce or death. These agreements can be particularly valuable in second marriages, where each spouse may want to protect assets acquired before the marriage or ensure children from prior marriages inherit certain assets.
3. Update Powers of Attorney and Healthcare Directives: In addition to updating your will and trusts, make sure to revise your powers of attorney and healthcare directives. If you remarry, you may want your new spouse to have decision-making authority in financial or medical situations. Failing to update these documents could leave an ex-spouse or someone else in control of these decisions.

Key Estate Planning Tools for Married and Remarried Individuals

Whether it’s your first marriage or a remarriage, these estate planning tools can help ensure your wishes are carried out:

• Revocable Living Trusts: A revocable living trust allows you to maintain control over your assets during your lifetime while ensuring they are distributed according to your instructions upon your death. It can also help avoid probate, which can be particularly beneficial for blended families.
• Qualified Terminable Interest Property (QTIP) Trusts: A QTIP trust can provide income to your surviving spouse for life, while ensuring that the remaining assets go to your children from a previous marriage. This ensures your spouse is cared for while preserving assets for your heirs.
• Irrevocable Life Insurance Trusts (ILITs): An ILIT can hold life insurance policies outside of your taxable estate, providing liquidity to pay estate taxes or leaving a tax-free inheritance to your beneficiaries, including your new spouse and children.

Updating Your Estate Plan After Marriage or Remarriage

Marriage and remarriage bring joy and new beginnings, but they also necessitate important updates to your estate plan. Failing to do so can result in unintended consequences, such as assets going to the wrong beneficiaries or leaving family members without financial support. By working with an experienced estate planning attorney, you can ensure that your estate plan reflects your current family structure and wishes, providing peace of mind for you and your loved ones.

Schedule a consultation today by calling (772) 539-9831 or visiting https://genesislawpa.com/scheduleaconsultation/