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Estate Planning Tips for Remarriage and Blended Families

Jean Moncla
May 19, 2021

Remarrying can make for complicated family situations, particularly when there are children from either spouse’s previous marriage — and especially if one spouse dies without a premarital agreement or will, or with an outdated estate plan. Here, we’ll take a look at some common remarriage estate planning pitfalls, along with insights on how to avoid them.

 

Estate Planning for Remarriage and Blended Families

 

Your ex-spouse may not be out of the picture

If your old will left assets to your former spouse, and you haven’t revised it, then in some states your ex may still inherit, even after a divorce. Likewise, if you named your former spouse as agent under your financial or medical power of attorney, that person could still be officially in charge of making financial or healthcare decisions on your behalf should you become unable to do so.

Tip: If you get divorced, promptly update your will, as well as your financial and medical powers of attorney. Also update beneficiary designations for bank accounts, life insurance policies and retirement accounts.

If you don’t have a will at all, the laws of the state where your estate is administered will decide who gets what. This can be a long, involved and public process. And, in some states, laws require that if you die intestate (without a will), your estate automatically goes to your children — meaning your spouse gets bypassed.

Tip: Make a will that details your wishes for asset distribution, including specific bequests. Review it periodically to keep it current. In some states, you may have the option to use a transfer-on-death deed to designate beneficiaries of real property while avoiding probate.

Your new spouse may not share

It’s nice to think that if you pass away first and your surviving spouse inherits your estate, that person will share equitably with your children, even if he or she isn’t the parent of those children. But the reality can be different, and your children may end up with little to nothing.

Similarly, don’t simply hope that any assets you do leave to your spouse will be passed to your children after that spouse’s death. Assets can be depleted for a number of reasons — from unexpected medical bills to lifestyle indulgences. There’s no guarantee there will be money left for the next generation.

Tip: Estate planning using premarital agreements, revocable trusts created during your lifetime, marital trusts under a will, life insurance policies, retirement accounts and gifting all offer ways to help protect the financial and real property interests of both your spouse and your children. Discuss the options with your advisors.

It’s important to realize that in some states, joint assets — potentially including bank accounts, real estate and vehicles — might automatically go to your surviving spouse on your death if you haven’t made other provisions in your will. You should also know that in some states, the surviving spouse has an exclusive right to occupy the homestead, with certain responsibilities, for his or her life. That’s true even if the home is the separate property of the decedent and gifted to someone other than the surviving spouse.

Tip: Consult with your advisors regarding the laws in your state to understand what rights you have to give away any portions of jointly owned property.

Your kids may not be ready to inherit

A blended family may introduce new beneficiaries to your estate plans. Perhaps you have minor children from your second marriage who are too young to directly inherit wealth. Or maybe you want to provide for certain new family members, but you’re concerned they don’t have the money management skills to handle sudden wealth.

Tip: Review and revise your beneficiary designations as needed. Trusts are one tool that can safely hold assets, with money distributed according to your stipulations. That could mean releasing the full trust fund when a child comes of age or when the child achieves milestones you’ve specified, or simply distributing funds on a specific schedule.

Work toward a smooth transition

Estate planning before and after remarriage, especially when you’re blending families, presents unique challenges. But none are insurmountable. Working with your advisors — and communicating your plans with your family and other beneficiaries — can help ensure a smooth transition of wealth. Your Hancock Whitney team is available to help if you have questions or would like to schedule a personal discussion.

 

Talk to a Private Banker

 

The information, views, opinions, and positions expressed by the author(s), presenter(s), and/or presented in the article are those of the author or individual who made the statement and do not necessarily reflect the policies, views, opinions, and positions of Hancock Whitney Bank. Hancock Whitney makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented.

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