A recent study by the Pew Research Center indicates that for all new marriages in the United States, 40% of those standing at the altar have been married before. The statistics for Tennessee mirror the same conclusion: Second marriages are commonplace. When considering making a new will or trust after you tie the knot for the second time, there are a few factors that you should consider.
Clarksville Estate Planning: Handling Assets in a Second Marriage
When you marry for the second time, you and your spouse must decide how each of your assets will be structured:
- Will you keep your assets in your name only?
- Will you commingle these assets with your spouse?
- Will you add your spouse as a beneficiary to certain accounts?
- What about providing for your kids from prior relationships?
The titling of these assets is critical from an estate planning standpoint. Understand that just because you marry someone, it does not mean that whatever you bring into the marriage immediately belongs to your spouse. Unless those assets are re-titled, your new spouse has no interest in your assets even though you are married. For example, if you had a bank account or owned land before you were married those assets are still yours only.
Part of the challenge of a second marriage is deciding what assets that you will commingle with your spouse and what assets will be kept separate. If you commingle assets, such as adding your spouse to your bank account, that means that your spouse will inherit that account at your death. If you have children, that may not be your desire. You may want to leave some money out of that account to your children. If your spouse is a joint owner on that account, your kids will not inherit anything from that account no matter what your will may say. Your spouse's right as a joint owner on that account trumps the will.
Your real estate functions in a similar way. If you add your spouse's name to your property deed with a right of survivorship, your spouse will inherit that real estate to the exclusion of your children.
The bottom line: You will have to decide if certain assets will remain separate or if they will be commingled with your spouse.
Potential Solutions for Estate Planning with Second Marriages
When considering dividing your assets between a spouse and child at death, loyalties often are split. What should you leave your spouse? What about your kids? It is difficult to decide who should receive certain properties. There are a few potential solutions to this issue:
One of the most common solutions is to place all your assets in a spousal trust. Your spouse would be able to use the assets in this trust for his or her lifetime. At that spouse's death, the balance goes to your kids. You could name your spouse as the trustee of this trust, or a third party if you have concerns about your spouse managing the trust. You can also limit how your spouse uses the trust assets through this trust.
Set Aside Accounts for Children
Another solution would be to set aside certain assets for your children. Consider naming them as beneficiaries on accounts or life insurance policies. By doing so, you ensure that your children will be provided for and able to receive money.
Contract to Execute a Will
Finally, you can enter into a contract to execute a will with your spouse. Here's how that works: As a newlywed couple, you and your spouse create a contract to leave property to the surviving spouse. Then, when the surviving spouse dies, the same property goes to your children. Pretty simple, right? But what if you die first and your spouse executes a new will leaving the assets to someone else? Tennessee courts have upheld these types of contracts even when the surviving spouse changes the will to benefit a third party. So these contracts to provide protections. In these cases, it is important to make sure everyone understands the situation and that the contract is properly executed and followed. Avoiding will contests and estate contests is in the best interests of all family members.
Other Thoughts on Estate Planning and Second Marriages in Tennessee
With a second marriage, you will have to reconsider other things, too, regarding your estate, like living wills or a power of attorney. Because your life circumstances have changed considerably, so too should your estate plan.
Contact a Clarksville Estate Planning Attorney
If you have recently tied the knot for the second time, its time to take a look at your estate plan with an experienced estate planning attorney. Take time to look at your current will or trust and update them as needed. What will your spouse receive? What will your children get? Remember: Be careful as to how certain assets are titled as that makes a difference as to who will receive those assets at your death. Speak with John Crow, a Clarksville Estate Planning Attorney, today to discuss the best way to structure a new estate plan for your new marriage.