A second walk down the aisle can complicate estate planning

An estate planning rule of thumb is to review (and, if necessary, revise) your estate plan in light of major life events. Such events include a marriage, birth of a child and a divorce. A second marriage also calls for an estate plan review. You’ll want to provide for your current spouse but not inadvertently benefit your former spouse. And if you have children from each marriage, juggling their interests can be a challenge.

Update your will and other documents

It’s critical to review your will, trusts, health care directives, powers of attorney and other estate planning documents to ensure that your wishes are carried out. Otherwise, you might unintentionally benefit your former spouse or his or her family or give them control over your affairs. Check whether your former spouse or members of his or her family are appointed as executor, trustee, guardian, agent or attorney-in-fact in any of your documents.

Consider a prenuptial agreement

If you have children from your previous marriage, you may wish to leave the bulk of your estate to them, particularly if your new spouse is financially independent. The laws in most states, however, make it difficult to “disinherit” your spouse.

For example, many states provide a surviving spouse with an “elective share” — typically between one-third and one-half — of the other spouse’s estate, regardless of the terms of his or her will or living trust.

You can use a prenuptial agreement to waive your respective rights to each other’s property. These agreements can also be used to serve a variety of other purposes, including retaining control of a business and defining premarital assets and debt.

Review beneficiary designations

Determine whether your former spouse is still named as beneficiary of any life insurance policies, annuities or retirement plans and update the beneficiary designation if appropriate. Also, keep in mind that, if you’ve named any minor children from your previous marriage as beneficiaries, and you unexpectedly die, your former spouse will likely become their legal guardian and gain control over their property. If this scenario is unacceptable, consider designating a trust as beneficiary for your child’s benefit.

Have you established any irrevocable trusts that name your former spouse as a beneficiary? If so, do the trusts provide that his or her rights terminate automatically in the event of divorce?

Also, find out whether your divorce decree grants your former spouse any rights with respect to life insurance, retirement plans or other assets. If the answer is yes, your ability to update certain beneficiary designations may be limited.

As you name new beneficiaries, be aware that your new spouse may have mandatory rights to certain assets, such as qualified retirement plans. If you wish to name someone else as beneficiary — a child from your previous marriage, for example — you’ll have to ask your new spouse to waive these rights in writing.

Make the most of trusts

If you leave wealth to your spouse outright, there’s no guarantee that he or she won’t spend it all or share it with a new spouse, leaving your children from your previous marriage with nothing. The creative use of trusts can avoid this result and ensure that all your loved ones are provided for.

For example, you might establish a trust for your new spouse (and any children you have together) and a separate trust for your children from your previous marriage. Another option is to set up a trust that provides your new spouse with income for life and preserves the principal for your children.

Avoid unintended consequences

Getting remarried may be a highlight of your life, but doing so can throw a monkey wrench into your estate plan. That’s why it’s critical to discuss with your estate planning advisor any revisions necessary to ensure you’re not surprised by unintended consequences down the road. 

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