Written by Robert T. Nickerson
As we get older, relationships can change. Sometimes we lose our loved ones. Sometimes we find someone new and want to be with that person. Sometimes we may even get remarried. In fact, grey divorces, which are divorces that happen to people in their sixties, have been more common in the past ten years. Hence, we've been seeing a lot more remarriages among the senior community. The joy of finding love later in life is always beautiful. But that happiness can also cause you to cloud your judgment and become forgetful in areas that need a little attention…such as your estate plan.
One problem is that under a new marriage, an estate plan that might have been good to go ten years ago will suddenly by out of date and could even cause consequences to your offspring from a previous relationship. Like perhaps your getting involved with someone who also has children from another marriage. There's a lot that could go wrong. In fact, here are four common issues I see and what can be done to avoid them.
Failure to protect your current spouse: I see this a lot, especially with those that have had many wives or husbands before (see my previous article on Larry King and the situation with his last wife to know more). In the event that you pass away without having updated your will to include your new spouse, it'll depend on the state your in, but in most cases, all your assets would go directly to your children. Nothing would go to the new wife. It would then be up to the kids to decide if they want to support a stepparent, but they have no legal obligation. It's unfortunate how family dynamics can go south when a patriarch dies.
What needs to be done is to work with an estate-planning attorney to design a plan that distributes your assets to both your spouse and children. Whether you'll want an equal distribution will depend on how you feel.
Not protecting your children from your last marriage: Like in the last statement where you protect your children but not your spouse, this can also swing in the other extreme; where all or most assets are left to the new spouse with only an "assumption" that they'll distribute assets to the children. This is very risky maneuver that I don't recommend as it puts your children in a stressful position. There are a couple of things you can do.
One option is to have a revocable trust that can provide some flexibility to both a spouse and children.
Another option is to have a separate marital trust set up. What this does is it directly crafts an exclusive fund for your spouse. You can even have a clause added that stipulates remaining assets in the trust are automatically passed to the offspring in the event of a spouses death.
Not protecting against depletion of assets: This one is also common. Let’s say you do trust your spouse enough that you do leave everything or a lot to her with the understanding it'll all pass along to the children when she dies. But because of life, something else like an illness happens, forcing most of the assets to go towards paying those kinds of expenses. What about long term care? That’s another thing I see come up all the time but people don't prepare for it in advance.
What I'd recommend is a life insurance policy that can provide for your spouse, which in turn could lead you to leave your assets. This is something that people wait until it's too late to consider.
Failure to protect your estate from your first spouse: I'm sorry to say just because both sides have signed the divorce papers, you still have work to do if you don't want them to play a part in your estate plan. While a legal divorce may automatically disinherit them (the keyword is "may"), you still need to change the names on retirement accounts and company life insurance plans to properly name the beneficiary.
People tend to forget to change names on those kinds of documents, but not doing so can cause a lot of problems for your children and even your current spouse. Not to mention that you need to make sure that a healthcare proxy has the right names for a power of attorney in the event of a medical circumstance.
The Law Offices of Jeffrey C. Nickerson can help you avoid all of these pitfalls. Estate planning can seem complicated, but we strive to ensure it's simple and creates an ease of mind. Click on the tab below to contact us for more information.
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