If you are contemplating remarrying, or are in a second marital relationship, what special concerns are there for your estate planning? The major issues are:
- Determining whose assets are whose;
- Deciding if you have a joint plan or two separate estate plans; and
- How to ensure that your estate plan succeeds if you are the one who dies first.
Often in a second marriage, one or both partners bring significant assets into their marriage, i.e., their own separate property. One problematic feature of Texas community property law is that income on separate property is considered community property. Without special care, after the passage of some time, what seemed like clearly separate property can be of a confused character leaving potential litigation upon death to determine whose property is whose. There are at least three ways to effectively handle this: pre-marital property agreements, post-marital property agreements, and a trust agreement clearly identifying the division of assets. Fully explaining these options is beyond this scope of this article, but suffice it to say, this problem can be solved.
Another major issue of a second marriage is whether there is a joint plan or two separate plans. Usually, in a nuclear family (parents with children only of their own relationship), the couple easily agrees on one plan which is usually they want their spouse to have all of the assets and then they all pass to the children. That is less likely in a second marriage where one spouse may want their assets to go only to their children and vice versa. This makes it essential to be able to segregate the assets between the spouses so that the correct assets follow the correct plan. Whether there is a joint plan or two separate plans, the couple can work together to ensure that their desires are accomplished.
Often, couples draft a Will that leaves everything to the surviving spouse with no restrictions on how the spouse might rewrite the plan. This is a greater concern in second marriages where the loyalty of the surviving spouse may wane to their step-children. In other words, the couple may come up with a joint agreement to treat all children equally, but will emotions change after one spouse dies and the surviving spouse does not remain close to his or her step-children? Most Wills we review do not protect the plan of the spouse who dies first. Whether done with a Will or Living Trust, we want both spouses’ plans to work equally well, regardless of who lives the longest.
This is only the briefest overview of the issues involving a second marriage. Like all of our estate planning, we only make recommendations after a free no-obligation consultation.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, specific tax, legal or accounting advice. We can only give specific advice upon consulting directly with you and reviewing your exact situation.
