There are a number of considerations when creating an estate plan, and the final arrangement invariably involves some amount of compromise. Even the most carefully created estate plan will need adjustments as life changes and alters the meaning or intent of the original plan. Some life changes create a huge shift in priorities and needs, with a second or subsequent marriage being a prime example. Introducing new people into the family will likely require a reshuffling of resources and authority, especially as applied to estate planning. Providing for the new spouse and children from one or both marriages will be important, but there may be potential conflicts that should be addressed early on to reduce the likelihood of protracted litigation when the remarried spouse dies. A discussion of estate planning techniques especially applicable to second marriages, and how failing to assess estate planning strategies in these circumstances can lead to legal and relationship struggles, follows below.
Estate Planning Techniques
The first step in reevaluating estate plans after a second marriage is to take stock of the family situation generally (for example, whether some family members need more support due to age or disability). It is also important to assess potential continuing obligations to a former spouse (under the terms of a divorce settlement) that could limit options for supporting new family members. It may be prudent to review the beneficiary designations on life insurance policies, retirement accounts, etc., to determine who is appointed to make financial and/or healthcare decisions. The purpose of this review is to ensure the existing estate plan accounts for differing priorities related to stepchildren, adult children, young children, and new spouses.
Wills are the most traditional form of estate plans and should be a basic component of all estate plans. However, in order to distribute the assets of an estate under the terms of a will, the entire process must be supervised by a court in probate. Probate is much simpler and less time consuming in Georgia compared to states like Florida and California; but it does add another layer of legal administration a family may want to avoid. Additionally, since the court would already be involved with distributing the estate, potential heirs may be more likely to engage in litigation. An estate planning option that may avoid this process is a revocable trust. Assets held in a revocable trust usually pass outside probate, meaning the costs and delays in transfer of ownership and possession are negligible (by comparison).
A revocable trust allows a person with blended families to reserve assets for both the new spouse and prior children and at the same time guards against the new spouse disinheriting the person’s children from a previous marriage. Other options include leaving assets to a surviving second spouse in a marital trust.
Risks of Inaction
In the happiness that surrounds a new marriage (and perhaps new children), updating estate plans is easy to overlook. People tend to address this issue once and fail to review how things are arranged until the very end, which can be problematic. Without updates, spouses and children from the second marriage may receive very little or nothing. Additionally, not updating beneficiary designations for an insurance policy, retirement account, or investment account is a common problem and can leave the second spouse with little means of support, while a prior spouse or adult children from the earlier marriage (who do not need the money) receive the proceeds.
Contact a Georgia Estate Planning Law Firm
Planning for the future to benefit all your loved ones is a common and admirable goal. Let the experienced estate planning attorneys at MendenFreiman, representing clients in the Atlanta area, help you protect your assets today and provide for your family tomorrow. Contact us at 770-379-1450 to schedule a consultation.
Resource:
gaprobate.gov/content/what-do-when-loved-one-dies?menu=main
