How Does Getting Remarried Impact an Estate Plan?
An important focus of your estate plan, if you are married, is likely ensuring that your spouse is financially protected in the event of your death. If you have children together, you likely plan for your combined estate assets to be passed down to your children after you are both gone. What happens, however, if you die at a relatively young age and your spouse remarries? Will the assets you intended for your children be safe? The Coral Gables estate planning attorneys at Stivers Law explain how getting remarried impacts an estate plan.
Reciprocal Estate Planning
Many couples create reciprocal estate plans, meaning their plans mirror one another. If you die first, all your assets go to your spouse and vice versa. When the surviving spouse dies, those combined assets are then passed down to the children. Traditional reciprocal estate planning, however, only works when neither spouse has children from a previous relationship and the surviving spouse does not remarry after the death of the first spouse.
Have You Discussed Remarriage with Your Spouse?
It is not an easy discussion to have, but then many estate planning topics are not particularly comfortable topics of conversation. Nevertheless, if you have yet to discuss the possibility of remarriage with your spouse, it is wise to do so. Some people are adamant that they want their spouse to find love again while others would consider it a betrayal of the relationship they had. Not only is it important to know how your spouse looks at the possibility of remarriage from an emotional standpoint, but it is also critical from an estate planning standpoint because if your spouse does remarry your reciprocal estate plans will no longer function as intended.
How Does Remarriage Impact Assets?
Under the terms of a traditional reciprocal estate plan, all your assets will be gifted to your spouse upon your death. If your spouse remarries, those assets become marital property in the absence of legal precautions preventing that from happening. Once those assets become marital property, they also become subject to division in a divorce. The new spouse also becomes a legal heir of your spouse’s estate, meaning that the new spouse could inherit your assets when your spouse dies if your spouse dies intestate (without an estate plan in place). While it is true that at this point you are gone and won’t personally be affected, your children certainly will! Moreover, if your spouse now lives in a state that allows a surviving spouse to take against the Will, the new husband or wife could have a claim to your assets even if your spouse honors his/her agreement and gifts them to your children in a Last Will and Testament. Hopefully, the need to discuss the possibility of remarriage is becoming more and more clear at this point.
Preventing the Loss of Assets with a Family Wealth Trust
Just as your estate plan protects against all other sorts of potential threats to your assets, a well-thought-out estate plan can also protect your assets in the event of your spouse’s remarriage. Specifically, a Family Wealth Trust (FWT) may be the answer. An FWT is a type of asset protection trust that can protect your assets while still providing for a spouse and/or children. Your FWT can stand alone or as a sub-trust within a larger trust. Your children are designated as the beneficiaries of the trust. Your spouse can be named as the Trustee of this trust, or you can appoint a close friend or professional Trustee. Your spouse can use or benefit from the property held in trust, but he/she does not own those assets. Ownership of the property in the Trust is reserved for your children. Most importantly, once assets are transferred into the trust they become trust property, meaning they cannot be included in the division of assets in a divorce nor does a new spouse have a claim to the assets in the event of the death of your spouse.
Contact Our Coral Gables Estate Planning Attorneys
For more information, please join us for an upcoming FREE webinar. If you have additional questions or concerns about estate planning, contact the experienced Coral Gables estate planning attorneys at Stivers Law by calling (305) 456-3255 to schedule an appointment.