Second marriages present estate planning challenges--which can be met with a combination of good communication and smart planning.
Second marriages can be wonderful things -- exciting, fulfilling, and rarely dull! At the same time, second marriages present special challenges in estate planning. You and your spouse may have children from previous relationships, as well as children together. You each may have property and other assets you've brought to the relationship. If you're like most people, you want to provide for your spouse's needs, while ensuring that your property (or much of it) ultimately will go to your children.
Providing for everyone you love can get tricky. You need an estate plan that fits you and your situation. Without one, you have no way of making sure that what you want to happen will actually happen. Relying on your spouse and children to "work it out" is not a plan. The good news is that you're not in this alone. Resources are available to help you get the plan you want.
To get started on a plan that's tailored to your needs, take the following steps:
Steal some quiet time to figure out your most important estate planning goals and what you would like to have happen with you and your assets (house, car, jewelry and other personal items, investments, insurance, retirement plans. and brokerage accounts) when you or your spouse pass away. Pick a time and place free of distractions, and be prepared to listen. You'll probably want to take some time to reflect before making important decisions about these issues.
Your wishes might change based on who passes away first, so think through each scenario, unpleasant as it may be.
Review any beneficiary designations you have made on insurance policies or retirement accounts. Many people forget to change their beneficiary designations when they get divorced or remarried, so make sure your accounts and plans and insurance beneficiaries are up-to-date with your wishes. You may be surprised at what you find!
If you know there are specific items you'd like to leave your children, start putting together a list. Make a note to address these in writing in your final plan. One of the biggest mistakes people in blended families make is that they're not specific about leaving property to their children. This can create disappointment and tension if the children don't receive an item they're convinced their parent wanted them to have--even if it's of little financial value.
Learn about tools and techniques that can help you get where you want to go. Leaving property outright (that is, with no strings attached) to the surviving spouse may not be the best approach, because it doesn't ensure that the children ultimately benefit. As a result, many people in blended families use trusts to provide for a spouse, while making sure their children ultimately end up with their property. Other techniques can accomplish the same purpose or save on estate taxes, if that's a concern.
Finally, find an estate planning attorney in your state with experience in blended families to guide you all the way to a completed plan. Remember, until you get your plan finalized, there's no way of confirming your wishes will be respected.
Good luck, and get going!
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