Estate Planning and Second Marriages, Part One: The Issues

Couples in first marriages generally have the same goals when it comes to their estate planning: take care of the surviving spouse for as long as he or she lives, then whatever is left will go to the children. They may own many of their assets jointly and, at the death of the first spouse, more than likely everything will go to the surviving spouse just as they had planned.
 
But if you are in a second marriage things are different. There may be your children, your spouse’s children and sometimes our children. You may each have assets that you brought into the marriage, and each of you may want those to go to your own children. At the same time, you probably want to make sure your surviving spouse will have enough to live on should you die first.
 
More than likely, the estate planning methods you relied upon in your first marriage will not work now. For example, let’s say you add your new spouse’s name on the title of your home and you own it as joint tenants with right of survivorship. If you die first, your share immediately transfers to your spouse, who now has complete ownership of your home. Your surviving spouse can then do whatever he or she wants with it now, regardless of what your will or trust says. He or she can leave it to her own children and completely disinherit yours.
 
There are similar problems with beneficiary designations. Many people name their spouse as beneficiary of their life insurance, IRAs and other tax-deferred plans to provide for their spouse should they die first. But this can be a problem with second marriages because your spouse-beneficiary can name anyone he or she wants as new beneficiaries or to inherit the proceeds, bypassing your children.
 
Promises may be made now to include your children, but promises can be broken after you are gone.
 
These issues can make estate planning more complicated in second marriages. In Part Two, we’ll look at some of the solutions.