Estate Planning After Remarriage
There are triggering events which make estate planning, or editing an estate plan, necessary in Oregon. Remarriage is one of these triggers. This is especially true if your new marriage includes children from previous marriages, stepchildren, and additional children from your current marriage.
Even in the most well-adjusted blended families, death challenges relationships. This makes a clear estate plan vital if you want to provide for family members while also reducing conflict. You must also avoid making the same estate planning assumptions that are appropriate in first marriages but are likely to backfire in subsequent ones. Here are four unique considerations when creating an estate plan after remarriage.
Conflicts of Interest
The natural inclination is to leave everything to your spouse and for your spouse to do the same. This is a safe avenue in first marriages when children only come from that marriage.
Remarriage changes that dynamic. If you pass all your property and money to your current spouse, understand that they have no obligation to consider your children from a previous marriage. Your death may create distance between them and if your current spouse outlives you considerably, he or she will be more likely to account for his or her own children and any new spouse. They are not likely to pass property to your children, especially if they have not spoken to each other for years.
One solution is to place your property in trust to provide income to your current spouse. Once your spouse passes away, remaining property is distributed to your children. You may include children from both your previous and current marriages and any stepchildren in that distribution.
If you decide to take this approach, appoint an uninterested third party to serve as trustee. Otherwise, there is a strong possibility of a conflict of interest based on self-interest.
If you appoint your spouse as the trustee, they may choose to invest your assets in low-yield options that leave nothing for your children once your spouse passes away. Likewise, your children may choose more long-term approaches that leave your current spouse inadequate income. An independent trustee is more likely to manage assets to everyone’s advantage.
Sometimes, the best approach to provide for children is with non-probate assets. Making them beneficiaries on your life insurance, retirement, and investment accounts is an excellent way of ensuring they receive something after your death. You are then safe to pass property and money to your spouse through your will.
This strategy is easier and less expensive than a trust but it requires attention to detail. Check the beneficiary designations on these assets and change them now. Most importantly, let your family know you made these changes and why. You do not want your spouse to expect a life insurance payout only to find out after your death that they are no longer entitled to those funds.
Your estate plan will likely include an advance directive and a durable power of attorney. These cover decision-making should you become incapacitated. The advance directive appoints a health care representative who makes health care decisions on your behalf. A power of attorney appoints an agent who manages your financial and business affairs if you are unable to do so. A power of attorney dies when you do.
Spouses are often the first choice for these appointments. In blended families, this may not be the best idea. Hurt feelings and conflict can arise if your children from a previous marriage do not feel your spouse is acting in your best interest or puts his or her self-interest above your needs.
You are better off choosing family members who are suited to these tasks rather than focus on relationship status. For example, you may discuss end-of-life decisions more frequently with an adult child rather than your spouse. Your child may listen better while your spouse shuts down when you bring up the topic. Or you may run a small business with a daughter, who is likely a better candidate to be your power of attorney.
The important part is, you want to appoint individuals to get along well with all family members, including your spouse. If there is so much tension that this is impossible, consider appointing someone outside your immediate blended family, like a close friend or sibling.
Dangers of Intestacy (when you don’t have a Will)
It may be tempting to do nothing and let intestate statutes take control. This may seem to prevent difficult discussions but it will only lead to many, many problems for your loved ones after you pass away.
Intestate succession only considers blood relatives. It will ensure support for spouses, children, parents, and even siblings. But if you are close to your stepchildren and want them to inherit assets or take over a small business, intestate succession will not allow that. Your stepchildren may also have special needs that you want to be provided for if you pass away. Again, intestate succession will not even take them in account, even if you had a close relationship. This only changes if you adopted them, which often does not occur if you remarry their parent when they are adults.
Blended families offer distinct estate planning challenges, but they are not surmountable. Find solutions by discussing them with an Oregon estate planning attorney. Call Gruber & Associates today to schedule a consultation.