Re-Marriage and Estate Planning: It’s a Family Affair
Lee Rosenberg, CFP | June 11th, 2009Many of my widowed and divorced clients have gone on to remarry later in life (maybe even for a third time). It’s wonderful that they’ve found happiness, but from an estate planning point of view, it can be a real challenge to make sure that love does conquer all. Given their later stages, re-marrieds come to the altar with an array of entanglements- children, grandchildren, property, businesses, assets, health concerns, etc.
That is why it is so important that prior to the wedding day, the couple, preferably with their families, discuss the wide variety of financial issues that will be impacted. Here are just a few of the questions that need to be addressed:
o What is the best way to provide for your biological heirs?
o What if there is great disparity of wealth between the couple
o How do you set up an estate plan for assets acquired before the marriage?
o Is there a need for a pre-nuptial agreement?
Of course it is always best to consult with legal and financial advisors, but here are some recommendations to help the couple get off on the right foot:
* Be honest- Full disclosure about current assets, debts, obligations, business affairs, legal commitments and other financial matters is not only fair but essential. The only way to develop a meaningful financial roadmap is if both parties can see all the roads.
* Update wills and other estate planning documents- although state laws differ insofar as superseding wills, for guaranteed protection, it is best to create new wills, as well as review other legal documents such as power of attorney, living wills, trusts, health-care proxies, life insurance and retirement plans (particularly the beneficiary designations).
* To protect the childrens’ rightful inheritances, look into a QTIP trust. This allows assets to be divided so that the spouse is supported by trust income while the children are taken care of by the principal. One key benefit of a QTIP is that the assets qualify for the marital deduction, which helps minimize estate taxes upon a spouse’s death.
* It’s not just the assets that need to be appropriated equitably, it is also the tax obligations upon death. If both spouses have heirs from previous marriages, those children should bear the burden of estate taxes equally.
Understandably, each couple will have their own unique concerns and goals, but if their financial affairs are dealt with honestly and openly, and with the help of trusted advisors, then there is greater chance that love will be lovelier the second time around.
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Tags: estate planning, family financial planning, financial affairs, inheritance, lee rosenberg, living wills, personal finance, power of attorney, remarriage, trusts, update legal documents
About the Author: Lee Rosenberg is the Co-founder of ARS Financial Services, Inc. As a Certified Financial Planner with more than 34 years of solid financial expertise. Lee is a registered representative of Cadaret, Grant & Co., Inc. He was also named one of the top 25 Independent Financial Advisers in the US by Rep magazine.
