Getting married for a second time is common. However, the financial and estate planning issues that result from remarriage can be anything but.
In remarriage, the complications and challenges created by blended families multiply. A couple must take several actions to get their affairs for the new marriage, including updating (or creating) their estate plan. Whether the couple chooses to have wishes documented together or separately, it is important to have their estate plan updated to protect their individual and joint assets.
Do We Need a Prenup?
Marriage is about love, but it is also about business. One of the best ways individuals can protect their assets is to create a prenuptial agreement. While it is never pleasant to think about the death of a loved one or separating from a new spouse, this agreement can ease the couple’s anxiety should something unexpected happen. A prenuptial agreement can also help avoid expensive and time-consuming litigation in the event of separation or divorce.
If the couple does not wish to have a prenup, they can use a Postnuptial Agreement (postnup). This document has the same intent and provisions as a prenup, but it is signed after they are legally wed. Keep in mind that over time, spouses may decide to leave assets to each other through trusts, owning assets together, or naming each other as beneficiaries on various assets, including life insurance or investment accounts.
Should We Maintain Separate Accounts?
Another way to safeguard assets is to keep them in separate accounts. This way, there will not be as many joint assets and the opportunity for the new spouse to take half of everything. Individuals can also put their assets in a trust. The trust will clearly outline where assets should be distributed upon the individual’s death.
Bottom Line: Have an Open Conversation
This may be difficult, but it is also one of the most important steps a remarried couple should take. The pair should have a frank discussion about assets and how they should be distributed. By doing this, the couple can also help avoid arguments and misunderstandings down the road.
By following the above-outlined guidelines, remarried couples can protect their assets and ensure that they are divided fairly after the death of a spouse.
Have Questions About Your Estate Plan and a Second Marriage?
The team at Scarola Law can help you create or update an estate plan and answer any questions you may have regarding asset protection. A properly prepared estate plan is crucial for anyone getting remarried, so don’t delay in taking action to protect your assets.