Around 40% of marriages are a remarriage for at least one of the spouses. Getting remarried can affect your estate plan. Many older adults are focused on making sure their grown children or grandchildren receive an inheritance. Without adjustments to an estate plan, a new spouse may inherit assets you intended for your children or grandchildren.
Steps you can take to protect the interests of all your loved ones when remarrying:
- Pre-nuptial agreement A surviving spouse is entitled to a percentage of assets, even if a Will states differently. In Ohio, this can range from 30-50%. The easiest way around is for a spouse to waive their rights in a pre-nuptial agreement.
- Double check how assets are titled Who receives assets when you pass depends on how they are titled, not on what is in your Will. Assets can be titled as a joint with rights of survivorship, transfer on death, or payable on death. These are all ways of making an asset go automatically to the surviving owner. If you do not want an asset to go to the joint owner of an account, you must retitle them.
- Review beneficiary designations Unless a spouse signs a waiver or disclaimer, many retirement accounts go directly to the spouse when the account holder dies, even if the account holder Will or pre-nuptial agreement states otherwise. Review beneficiary designations on life insurance, annuities, and bank or brokerage accounts.
- Revise your power of attorney Make clear who you wish to be your Guardian or Power of Attorney (POA) to provide for your care or decision making in the event of illness.
- Consider long-term insurance If one spouse falls ill and requires expensive nursing home care, the other spouse could be legally required to pay for it. Paying for expensive care can quickly drain an inheritance for children or grandchildren. Long-term care insurance can prevent this.
- Transfer assets into a Trust Many adults who remarry decide to include in their Will that certain assets pass into a Trust for their surviving spouse. Usually this Trust will pay income to the surviving spouse, and then be inherited by the first spouse’s children when the second spouse passes. Such a trust is called a “Qualified Terminable Interest Property,” or QTIP, and is treated as having gone to the surviving spouse for estate tax purposes (so no estate tax is paid!).
In this Trust, specify how the assets are invested, lest you risk your spouse and children arguing about it. One possible solution is creating a “unitrust” that will give your spouse a percentage of the total assets annually. This means everyone is benefiting if the assets are appreciating, and will mediate argument over how to invest.
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