If you are getting remarried, you obviously want to celebrate, but it is also important to focus on less exciting matters like redoing your estate plan.
You may have created an estate plan during your first marriage, but this time it may be more complicated-especially if you have children from your first marriage or more assets. The following are some pointers for ensuring your interests are taken care of when you remarry:
Take an inventory.
The first thing you and your partner should do is each take an inventory of your assets and debts. Then, you should share it with the other person. Don’t forget to include life insurance policies and retirement plans in inventories. It is important to be open and honest about money.
Decide how you want to handle finances.
Once settled, you need to decide if you want to combine (or not combine) assets when you are married. For example, if one partner is selling a house and moving in with the other partner, will he or she contribute to the cost of the house? If one partner has debt, you may not want to combine finances or make any joint purchases. These decisions need to be made upfront so everyone is clear on what to expect.
Decide what you want to happen when you die.
You and your spouse need to figure out where your assets to go when you die. If you have children from a previous marriage, this can be a complicated discussion. There is no guarantee that if you leave your assets to your new spouse, they will provide for your children. There are options to ensure your children are provided for, including creating a trust for your children, making your children beneficiaries of life insurance policies, or giving your children joint ownership of property. Even if you don’t have children, there may be family heirlooms you want to keep in your family. Again, open discussions can prevent problems in the future.
Consult an elder law or estate planning attorney.
Even if you don’t have a lot of assets, you should consult an attorney, especially if you have children. You will definitely need to update your will. You may also need to update or create other estate planning documents such as a durable power of attorney and a health care proxy. If you have significant assets, a prenuptial agreement may be appropriate. In addition, the attorney can help you decide if a trust is necessary to protect your children’s interests.
Change your beneficiaries.
You may want to change the beneficiaries on your life insurance policy, annuity, and/or retirement plan. If you are divorced, however, you may not be able to change some of the beneficiaries. Bring your divorce decree with you to the attorney so he or she can make sure you do not violate the decree. If you can’t change your beneficiaries, you may want to buy additional life insurance or retirement plans that will include your new spouse.
Consider a prenuptial agreement.
While you plan to stay married, things happen. Unlike a first marriage, you may be bringing property to this marriage that you spent decades accumulating and you may be merging two families. You need to decide together what your intentions are for the use of funds while you are living together, if you get divorced and when one of you dies before the other. Failure to think and plan ahead can mean severe heartache and financial costs for you and your family.
Consider purchasing long-term care insurance.
While you may be willing to spend your lifetime of savings on the care of a spouse with whom you raised a family and accumulated the funds, you may not want to lose this to the care of a relatively new spouse. Long-term care insurance, while expensive, can permit you and your new spouse to get the care you need without impoverishing the other.
The most important thing to remember is to be open and honest with your future spouse and your family members about your wishes.