The benefit of estate plans for remarriages

Colorado residents who are getting married for the second or subsequent time should make estate planning a priority.

In this day and age, it is not uncommon for people in Colorado to marry for the second or even third time. These remarriages may occur after divorces or the death of a spouse. Either way, it raises new issues when it comes to estate planning. Individuals should therefore make it a priority to discuss their long-term plans with their future spouses before the remarriage takes place.

Why is estate planning so important in a remarriage?

A new marriage often brings together not just spouses, but children from prior marriages as well. The children from the first marriage may expect to inherit when their parent dies. However, this does not always happen in a remarriage unless such wishes are clearly communicated and legally documented. All of the assets of the first spouse to die may pass to the other spouse, and, in turn, to second spouse's heirs; to the exclusion of the first spouse's children. With proper planning, the surviving spouse and the deceased's spouse's children can be taken care of.

A good estate plan can and should also accommodate any obligations spouses may have from their prior marriages. For example, if one person is to pay spousal or child support, this can be factored into an estate plan.

Is a trust appropriate? Is it all I need?

Estate planning for "blended families" often involves trusts, which can be "stand-alone" trusts or trusts contained in a will ("testamentary trusts"). For example if the husband dies, he can leave assets to his spouse in a trust which provides for her support and maintenance during her lifetime, but at her death, distributes any remaining trust assets to the husband's children from the prior marriage. By doing so, the husband takes care of his wife while she is living, but also provides an inheritance to his children when she no longer needs the funds. Another important matter to be addressed in any estate plan, whether related to a first marriage, or second, is to establish powers of attorney for healthcare and financial matters. These documents can avoid the necessity of having to go to court to establish a conservatorship or guardianship should you become incapacitated. They can also clearly identify who can act on your behalf and what decisions can be made, thereby avoiding disputes among family members.

How should I handle beneficiary designations?

Beneficiary designations will control over the terms of a will or trust. In other words, if your trust or will provides that insurance benefits will go to Person A, but the beneficiary designation in the insurance policy designates Person B, the proceeds will go to Person B. It is therefore, particularly important for blended families to review beneficiary designations to ensure that those assets (e.g., life insurance, IRAs, 401(k)s, etc.) pass to the desired family members, whether they include the new spouse, children of the first marriage, or stepchildren. Otherwise things can get messy. Percentages can be applied to the various beneficiaries, and can include distributions into trusts for their benefit.

What about a prenuptial agreement?

A prenuptial or post-marital agreement can also be a valuable complement to other estate planning documents for blended families. The agreement can identify which assets and debts each spouse brought to the marriage, what should remain separate, and can include provisions waiving rights the surviving spouse might otherwise have in the estate to assets intended for children of the first marriage.

How can I make sure my plans are valid?

It is recommended that you work with an attorney when creating an estate plan. This is particularly true for Colorado residents who remarry and have children from a prior marriage, as their estates and distribution plans tend to be more complicated.