Yours, Mine and Ours – Estate Planning for the Second Marriage

No one gets married planning to get divorced. However, it is estimated that over 50% of first marriages end in divorce. For people whose marriage ends in divorce when they are under 45, 75% remarry within four years. More than half of remarriages involve children from a prior marriage.

Whether your new family is the Brady Bunch or socially and psychologically challenged, second marriages have unique estate planning challenges, and I have a few thoughts to share.

Some of the challenges unique to the “yours, mine and ours” family include disinheriting your ex-spouse, providing for your new spouse, your children and stepchildren, and minimizing taxes without disinheriting your children at the time of your death.

Before remarriage, consider putting a simple prenuptial agreement in place that clarifies your desires and how your major assets will be maintained and handled during marriage. Absent an agreement, commingling of assets usually means that what you thought were your separate assets are now joint assets. Beware though, that a poorly drafted agreement may also limit your planning options down the road.

It is common for a married couple to leave all their assets to the other spouse upon their death. In a second marriage giving all your assets to your surviving spouse can result in your surviving spouse depleting the inheritance during his or her lifetime, leaving nothing for your children. To provide for your second marriage spouse, you may want to place your assets in a trust with income going to your spouse during his or her lifetime, but leave the corpus of the assets remaining in trust for your children or grandchildren. Not only will this provide for your children, but it protects your inheritance in the event of your spouse’s subsequent remarriage and even divorce. Properly drafted, a trust can provide protection from excessive spending, divorce, frivolous lawsuits and bankruptcies to ensure that your assets are allocated according to your wishes.

With a blended family from divorce and remarriage, there are a myriad of estate planning challenges with various solutions depending on your goals and family members’ needs. One size does not fit all. Assure your own peace of mind by identifying and discussing your concerns with your family, and seek the assistance of a qualified estate planning attorney to ensure that your wishes will be followed.