Navigating Multiple Marriages and Estate Planning

Estate planning can be tricky when you or your spouse have had multiple marriages. This is especially true if either of you has children from prior relationships or specific assets you want to keep separate.

Traditionally, estate planning involves leaving everything you own to your spouse. However, this could result in your children being excluded from an inheritance. To avoid this situation, consider the following estate planning tips when you or your spouse have had multiple marriages.

Estate Planning After Divorce Considerations

Leaving your estate to your spouse outright could result in your children being disinherited. A second spouse might choose to leave some or all of your assets to their own children or other beneficiaries. 

• To prevent this, consider establishing a spousal trust. This allows your assets to be placed in a trust for the benefit of those you choose. You can designate a trustee or co-trustees to manage the distribution of your estate, providing some money to your children and the income from the trust to your spouse.

• Additionally, you can direct the trustee to distribute principal to your surviving spouse for specific expenses like health, education, maintenance, and support. When your spouse passes away, you may choose to have the trust assets revert to your children or other beneficiaries.

• Keep in mind that a spouse cannot be completely disinherited and is typically entitled to at least one-third of the deceased spouse’s estate. Disinheriting a spouse is only possible with a prenuptial agreement in which both parties waive their claims to each other’s estate.

• It’s also crucial to consider who you want to make your financial and medical decisions if you are unable to do so. Some people prefer their new spouse to make these decisions, while others might want to assign this responsibility to their adult children.

Estate Planning for Divorce: Questions to Ask

Discussing estate planning with your spouse is essential, especially if either of you has been married before. Consider these questions:

• Do you want to combine assets or keep them separate?

• Which specific assets will you hold as individuals versus jointly?

• What assets will be left to each of your children?

• Will any individual assets be retitled into both of your names?

• Are either of you bringing debt into the marriage?

• What estate planning documents do each of you currently have?

Divorce and Estate Planning Tips

Take Inventory of Your Finances

Immediately take an inventory of your finances with your spouse, including assets and debts. It’s important to review life insurance policies and retirement plans, as these will impact your estate planning.

Clear Communication

Once you understand your finances, communicate your wishes for your assets with your spouse and children. This helps avoid surprises and conflicts when settling your estate. Early discussions can prevent confusion and disputes.

Topics to cover with your spouse include:

• Your wishes if you become incapacitated

• How you want them to handle matters after you pass away, including how and when to communicate the provisions of your estate plan

Update Your Beneficiaries

If you are divorced, review your life insurance policies, annuities, bank accounts, retirement plans, and other assets to ensure your ex-spouse is not listed as the beneficiary (unless you intend for them to be). Verify with all your financial institutions that your beneficiaries are up-to-date and reflect your current wishes.

Create a Trust

Trusts can be a useful estate planning tool for blended families. For example, a marital trust goes into effect upon the death of the first spouse. A trust allows you to specify the beneficiaries and the distribution instructions for your estate.

Consider a Prenup

Prenuptial agreements can be beneficial, especially for couples marrying later in life. Though they may seem unromantic, prenups are a practical estate planning tool and are customizable. They can waive each spouse's claim to the other's estate.

Bring in a Professional

Hiring a financial planner can help mediate estate planning discussions with your spouse. Choose a professional who charges by the hour to ensure objectivity. A good financial planner will help you understand the impact of multiple marriages on your estate plan and overall financial situation.

Final Thoughts

Estate planning for blended families can be complex, but it’s possible to protect both your spouse and children with the right strategies. While discussing estate planning with your new spouse may not be the most romantic conversation, it’s a thoughtful way to ensure their needs and wishes are respected.

Take our assessment