Any major life change should prompt a review of a person’s estate plan. An estate plan is a living document, and the provisions included in the plan may need to change following a divorce, death, or second marriage. There are many factors worth considering when revisiting your estate plan due to a new marriage. The most sensible changes for each estate plan will vary depending on whether the spouses have children, the value of the estate, and a wide range of other variables. Revising an estate plan following a second or subsequent marriage can be a complex process, but an experienced estate planning lawyer may be able to help. The team of experienced Denver estate planning lawyers at the Johnson Law Group is dedicated to helping our clients develop estate plans that effectively address their needs and preferences. Consider calling (720) 744-3513 today for more information on second marriages and estate planning.
Questions To Ask During an Estate Plan Revision for a Second Marriage
A second marriage will require a thorough overview of each spouse’s estate plan. While the required changes will depend on the circumstances of the marriage, there are a few general questions that newly married couples should consider if one of the spouses was previously married:
- If there are children, what will each child inherit?
- If the new couple plans to have children together, what assets will these new children receive?
- How will the individual pre-marriage assets of each spouse be incorporated into the estate plan?
- Will any individual assets need to be updated with both spouses’ names, such as a vacation home or bank account?
- Does either spouse have debt?
- Will each spouse update an existing will, or will the couple draft a new joint will?
- How should healthcare directives and power of attorney provisions be updated?
- How might establishing a trust be beneficial?
Engaged couples need not wait until they are married to have this conversation. In fact, many couples benefit from discussing estate planning before marriage.
Updating an Estate Plan for a New Marriage with Children
Estate plans for second marriages are inherently more complicated than first marriage estate plans, and this is doubly true when children are involved. For marriages where each spouse has children from a previous marriage, there may have been assets left to the children in an estate plan from the previous marriage. In some situations, this part of the estate plan may need to be updated. For instance, the couple may wish to draft a new estate plan that distributes assets to the children from both spouses, rather than keeping the same estate plan and distributing assets separately.
In this example, the couple getting married each has two children from a previous marriage. In their previous estate plans, each spouse equally distributed certain assets to each of their two children. After getting married, the new couple decided to write a new estate plan in which their assets are pooled and evenly distributed to all four children. The estate planning lawyers at Johnson Law Group are prepared to assist clients with matters related to second marriages and estate planning.
Do Beneficiaries Need To Be Updated After a New Marriage?
Ideally, beneficiaries should be reevaluated as soon as possible following a divorce. A review of beneficiaries is also worth conducting prior to a second marriage. Even though Colorado Revised Statutes Title 15 automatically revokes provisions from wills and trusts that benefit the divorced spouse, it is important to update an estate plan to designate new beneficiaries to replace the former spouse. Additionally, beneficiaries named in specific assets like bank accounts or 401(k) plans may need to be updated. For example, the spouses may wish to name their stepchildren as beneficiaries in the new or updated estate plan, as well as in retirement accounts, life insurance policies, and other documents outside of the plan itself.
Trusts in Estate Planning for a Second Marriage
Establishing a trust may be beneficial for marriages in which at least one of the spouses was previously married. Trusts can be useful for many different types of marriages, but the Qualified Terminable Interest Property (QTIP) trust is especially common in marriages that include a spouse with children from a previous marriage. These trusts can be used to capitalize on the marital deduction while retaining control of the distribution of assets when one of the spouses passes away.
QTIP trusts are related to gift and estate taxes, according to the Internal Revenue Service (IRS), which dictates that a tax will be imposed once gifts and bequests exceed the designated credit. However, properties that pass to a surviving spouse are not subject to gift or estate taxes as long as full ownership of the property passes to the surviving spouse. The QTIP trust is an exception to the rule. For instance, if Spouse A wants to pass down $1 million to his or her children in the form of a gift, it would be subject to the gift and estate tax. To avoid this, Spouse A could instead place this $1 million in a QTIP trust to be distributed to Spouse B when Spouse A passes away. This money could then be included in Spouse B’s estate plan and distributed to the children when Spouse B also passes away.
Consider Discussing Your Options with a Denver Estate Planning Lawyer
If you are getting married for a second, third, or subsequent time, reviewing your estate plan is critical. However, many couples may feel like they lack the time and expertise to handle the process on their own. Estate planning attorneys and financial advisors specialize in helping their clients make the updates that best suit the needs of their families. At the Johnson Law Group, the seasoned estate planning lawyers take pride in helping clients reach arrangements that benefit both spouses, their children, and other beneficiaries. For answers to your questions about second marriages and estate planning, consider calling (720) 744-3513 today for more information.
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