After a divorce or the passing of your first spouse, getting married again can feel like a new beginning. Yet, it's crucial to take into account how merging your life with another person's may affect your financial strategy, especially how you handle your estate. It might be challenging to judge what's reasonable for your estate plan in a second marriage, particularly if you or your partner are bringing children into the marriage or have plans to eventually have children together.
Remarriage can raise some crucial issues for estate planning. Whether amending individual estate plans or establishing a new joint one, both spouses should be aware of the key problems.
What happens to your Will if you remarry?
Your existing Will is revoked if you remarry without creating a new one to reflect your new marriage. This means you no longer have a valid will, and your estate will be distributed in accordance with State intestacy laws.
Your spouse will inherit your whole inheritance if you have no surviving children, grandchildren, or great-grandchildren.
This can lead to issues because a valuable asset, like real estate, may be jointly owned by your current spouse and your children from a previous marriage. As a result, it's crucial to create a new Will after your second marriage that specifies who you want to inherit in order to ensure that your final wishes are carried out.
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You may also find your state-specific requirements for a Last Will and Testament in this article.
What is the best Trust for a blended family?
The answer is AB Trust. AB Trusts are Trusts made by married couples jointly to avoid Estate Tax. The term “AB” has been given to these trusts because, upon the death of one spouse, this Joint Trust splits into 2 Trusts, namely Trust A and Trust B.
Trust A - Survivor’s Trust
Trust B - Decedent's Trust
The surviving spouse has little control over the Decedent’s Trust but he can still take a few advantages. For example- receive income from the decedent’s trust or continue to live in the house of the decedent, etc. Provided that all these things are written in the Trust document of the Decedent.
So, from the above discussion, we can conclude that the primary goal of AB Trust is to avoid “Double Taxation” and make sure that the benefits of the Trust are given to the appropriate Beneficiary, which is usually the spouse in most cases.
Read about the other types of Trusts which you may consider.
How can I ensure my children from my previous marriage are provided from my Estate?
Protecting your children's interests and making sure they inherit the family house without making your new spouse homeless if you pass away is a top priority for individuals who are remarrying. This problem can be resolved by creating a family trust in your Last Will, which enables your spouse to live in the home with you until they pass away but transfers ownership of the estate to someone else according to your wishes.
If you decide not to include someone who is dependent on you in your Will, they could be able to make a claim on the estate after your passing.
Who will receive savings from my Retirement and Life Insurance accounts?
Another option to support a large, interconnected family is through Life insurance. You could, for instance, designate your spouse as the beneficiary of the majority of your assets while naming your children as beneficiaries on a Life insurance policy to provide for them.
Even if your Last Will specifies otherwise, Life insurance and Retirement funds like IRAs and 401(k)s flow immediately to the principal beneficiary you have designated rather than through your will. Make sure your beneficiaries have been adjusted if you are divorced and remarrying to prevent your retirement funds from going to your ex-spouse.
Should I connect with an Estate Planning attorney?
You may get away with creating a do-it-yourself will online if you have limited assets and straightforward circumstances. It's an easy, affordable alternative that is preferable rather than having no Will at all.
But, if you're older and in a second marriage, it could be a good idea to spend the time and money to hire a professional to draught a detailed estate plan.
While hiring a lawyer will cost you money, you'll have the peace of mind knowing that you, not a probate judge, will decide who gets what when you pass away.TrulyWill offers comprehensive, state-specific, and legally valid estate plans with basic Will starting at just $99. You can now make an estate plan in less than 20 mins. With a team of experienced attorneys with years of experience in Estate Planning, Probate, and Family Law matters make us a trusted platform to help you create your estate plan.
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