Estate Planning for Second Marriages
When you first got married, you and your spouse were on the same page. You created your estate planning documents for your life together, planning for every phase in life. But when you divorced, you didn’t think about those documents again until you met your new partner. When you decide to give marriage another try, you have to come back to your estate planning documents to update them. According to a 2013 survey by Pew Research, 4 in 10 new marriages included at least one partner who had been married before. Over the years, this hasn’t changed even as marriage rates are down for the millennial generation. This is because remarriage is still a trend for those in the 50+ category.
When it comes to estate planning for second marriages in Tennessee, there are some important elements to consider to account for all of your loved ones in the future.
Structuring Assets in a Second Marriage: Remarriage Asset Protection
Many people believe that when they marry, what’s yours is now also your new spouse’s. But the reality isn’t so.
In Tennessee, the property you acquired before you said “I do” is yours. The only reason it would become marital property is:
- If you change the title
- Your spouse contributes to the property/asset in some way
That’s why when you enter into a second or third marriage, you need to consider the following:
- Will your assets be in your name alone?
- Will you and your spouse intertwine your assets?
- Will you add your new spouse as a beneficiary to financial accounts?
- How will you support your new spouse through retirement and perhaps, your death?
- What will be the financial results if the marriage fails?
- Will you make amends to your estate planning documents to ensure children from a prior relationship are accounted for?
The final point is a critical one to consider.
Many individuals think that if they have children from a prior marriage or relationship, the new marriage and/or children it brings will not change their rights to your estate. However, if your new spouse is your primary beneficiary, it may. If you pass first, they can legally leave your children from your prior relationship out.
In addition, there may be other problems if you never made adjustments to your old estate planning documents. Your ex may be able to take some of your assets if you pass first. Though your loved ones can take legal action, it ends in probate, which no one wants to deal with.
So what can you do?
Estate Planning for Second Marriages in Tennessee: Make a Plan
We know that estate planning for blended families can be difficult. But it doesn’t have to be. There are a variety of documents you can put into place to ensure all of your loved ones are taken care of. In addition, it will help protect your assets held before you begin the new marriage.
Prenuptial Agreements
If you have not entered into the new marriage yet, you and your spouse-to-be may want to consider creating a prenuptial agreement. This will allow you both to have a candid conversation about each spouse’s rights to assets in the marriage as well as what you expect certain people to receive in the event of your death.
A prenup is a great way to begin this new phase of estate planning. This is because it forces you to look at your assets and debts and consider the future. A prenup is particularly beneficial if:
- You hold family property that children from your first marriage would like to inherit and pass along
- You own a business
- You have substantial investments
- Your income is far greater than your new spouse’s
- Your new spouse holds sizeable debts
Prenups can be difficult to bring up. However, it’s important not only from an estate planning perspective but from an asset protection stance. Your children from your previous relationships may have concerns about what will happen if you pass before your new spouse.
Utilizing prenuptial agreements as well as other estate planning measures will make sure that your assets are protected and end up in the right hands.
Trusts
Create two trusts, one for your children from your previous marriage and one for your children from your new one. This is a great way to ensure no one is left out of your estate plans.
In addition, when it comes to retirement, you may be able to live off the proceeds of the trust, depending on how you navigate it, and pass the remainder to your spouse, children, etc.
These trusts, known as Qualified Terminable Interest Property (QTIP), allow a spouse to give a life estate to his or her spouse. Then, upon that spouse’s death, it becomes part of the estate for the children or other beneficiaries.
Beneficiary Designations
Beneficiary designations are one of the clearest and simplest ways to plan for your blended family’s future. For example, you may have assets you want to go specifically to your children from your first marriage where you have acquired some property that really is more meaningful to the children of second marriages.
Having beneficiary designations allows you to make these decisions before your passing so when your time comes, there is no question about your wishes.
Contact MHPS for Your Estate Planning for Second Marriages Needs in Tennessee
Whether your second marriage has resulted in a blended family situation or you have sizable assets you are concerned about, you need to start the estate planning process for your second marriage. If you live in Nashville, Springfield, or anywhere in Tennessee, you need the estate planning guidance of MHPS.
Don’t delay. Contact us at MHPS Law now for more information.