An Overview of Estate Planning and Remarriage
There is an important added layer to think about when you consider children from a previous marriage. We’ll talk more about this further down. In this legal guide, we will provide some insight into estate planning and remarriage.
In this legal guide, we will provide some insight into estate plannin
Beneficiary DesignationsIf you do not have a comprehensive estate plan, you probably have some relevant elements in place. Life insurance policies and individual retirement account would fit into this category.
When you are getting remarried, you have to rethink the beneficiary designations. It should be noted that your spouse will automatically be the beneficiary of your 401(k) account under federal laws.
Someone else can potentially be named to act as the beneficiary, but your spouse would be required to sign a written waiver.
Discuss Your IntentionsYou should have an honest discussion with your spouse with regard to your respective estate planning intentions. If you can find common ground, you can go forward on solid footing as you enter into your marriage.
Each person can create their own separate estate plan, and it is possible to establish a joint trust. The best way to proceed will depend on the circumstances, and this is why legal counsel is invaluable to these situations.
Qualified Terminable Interest Property (QTIP) Trust
There is an estate planning device that can be very useful for some people with children that are getting remarried. It makes a lot of sense if you are bringing significant resources into the marriage and you are older than your fiancé.
You could establish and fund a qualified terminable interest property trust. Your spouse would be the initial beneficiary, and your children would be the successor beneficiaries of the trust.
When you are drawing up the trust, you name a trustee to act as the administrator. This can be a non-professional that you know personally, but the role is a sensitive one. Being Objective is important, so you could engage a trust company or the trust department of a bank.
If you pass away first, the trustee would distribute the trust’s earnings to your spouse for the rest of their life. The surviving spouse could also utilize property that is technically owned by the trust. For example, they could reside in a home that is held by the trust.
You can give the trustee the ability to provide discretionary distributions of the principal if you choose to do so, but the beneficiary would have no access to it. They would not be able to change the terms either. The terms would be set in stone.
After the death of your surviving spouse, your children would become the beneficiaries of the trust. This approach can be very effective from a purely strategic standpoint, but there is another consideration.
There is no candy coating the fact that your children would have an interest your spouse’s longevity. With this in mind, you can provide them with limited inheritances shortly after your passing using a different method to prevent a tense, uncomfortable dynamic.
Incapacity PlanningYour broader estate plan should include an incapacity planning component. You can state your life support preferences in a living will, and you can add organ and tissue donation choices.
A durable power of attorney for health care is another advance directive that should be added. You name an agent in this document that will be empowered to make decisions on your behalf that are not related to life-support utilization.
For financial matters, you can create a durable power of attorney for property. If you have a living trust, you would act as the trustee while you are living. A disability trustee can be named in the trust to assume the role in the event of your incapacity.
We Are Here to Help!Our doors are open if you would like to work with a Cincinnati, Ohio estate planning lawyer to put a plan in place. We will gain an understanding of your situation and make sure that you take the right steps to protect everyone that you love.