The divorce rate among first marriages has hovered around 50% for decades. Click here to view Divorce Statistics Another phenomenon in the area of remarriages is the fact that people are living longer. Often one spouse may die and the surviving spouse will remarry. If the spouses have children from their first marriages, thought needs to be given to how estates will be distributed. Thought must also be given to the age, health, and finances of the surviving spouse. Second marriages and remarriages provide a vast number of estate planning issues that need careful planning. Click here to read how Lucille Ball's daughter was unintentionally disinherited
The best strategy is always to plan ahead. Highlighted below are seven considerations and potential solutions for planning for second marriages.
1. How long has the second marriage lasted? The second spouse is often regarded with resentment from the children and first family for taking the place of the first spouse. Over time, this resentment may fade as the children realize that their parent and the second spouse are truly happy together. Therefore, the duration of the remarriage should be a factor in considering how to allocated an estate to a spouse upon their death.
2. The financial situation of the parties. The relative financial positions of the parties should also be considered. In looking at this factor, it should always be contemplated with respect the duration of the marriage. We had clients who were remarried for over 30 years. The husband was in an accident and suffered from a head injury. The couple had used the wife's IRA to live on for the past 20 years and was almost completely gone. It was determined that the husband's IRA, which would allow the wife to continue to live her middle class lifestyle, named his children as the beneficiary. Without the IRA money, the wife would be destitute. In this case, the husband lacked the capacity to understand the situation and make a change. If he had the capacity to make a change, he could have left his IRA to his wife on the condition that she name his children as the beneficiary on her death.
3. Looking at the situation from the heirs point of view. Often, in a remarriage, it is assumed that both parties will leave everything to one another and the last to die will split everything equally between all the children from both sides. There are many factors which prevent this from happening. First, a spouse might die and the living spouse may live for many years, even decades. During this time the money in the estate may be used to care for the living spouse. Depending on the age and health of the surviving spouse, there could be the complication of another remarriage.
In our experience, a great deal of thought should be given to what the children of the first marriage will receive should their parent be the first of the couple to die. A careful estate planning attorney will help their clients by looking at the matter from the heirs' point of view. A solution can be to provide an outright bequest of a portion of the estate, or name them as beneficiaries on an insurance policy. This money will be protected for them if their parent is the first to die. This solution helps those children to feel loved and not slighted by their parent or the step parent. Our firm often recommends this solution, especially if the parent has married a much younger spouse.
Failing to consider the situation from the heirs' eyes can lead to a lifetime of bad feelings and unnecessary and unintentional hurt.
4. What if there are prenuptial agreements? A prenuptial agreement should always be reviewed prior to any estate planning to ensure that the estate plan is consistent. Often times, if the second marriage has lasted for a significant amount of time, the prenuptial agreement may need to be altered to reflect the changing circumstances of the couple. Over time, the income of the parties may have changed, the health of the parties will probably be different, and the children of first marriages will have different circumstances. An attorney should provide guidance and counsel to clients to make sure that their goals for the estate plan don't contradict other legal agreements.
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