With the New Year are you planning to remarry? Congratulations! Have you given any thoughts on how this could impact your California estate plan? In fact, remarriage and estate planning often work hand in hand. We do have three New Year’s considerations for remarrying and your California estate plan.
Typically, when couples in their first marriage create their California estate plans their goals match. Each spouse wants to take care of the surviving spouse for as long as he or she lives, and then divide what is left equally among their children. Or, if your children are still minors, you set up a trust for the children until they are adults. And, in fact, most couples jointly own their assets. However, this is not usually the case when dealing with remarriage and estate planning.
If you remarry or marry later in life or marry after amassing significant wealth, your goals and the goals of your soon-to-be spouse may not be so perfectly aligned, and the traditional methods for California estate planning may not work as well. Consider the following scenario, if you decide to put your new spouse on the title of the home you own, it is now considered jointly owned with the right of survivorship. In other words, when you pass away, the home becomes the property of your spouse, without restriction. In addition, there may be no guarantee that he or she will pass it along to your children from your prior marriage.
So, your first consideration for remarriage and estate planning may be to consider planning separately, especially if you or your soon-to-be spouse have significant assets. Have an honest conversation about your individual estate planning goals and make the decision together. If your goals are sufficiently similar, then you may be able to plan jointly. If they are significantly different, consider having separate attorneys.
Your second consideration could be to use a QTIP trust in remarriage and estate planning if you have significantly more assets than your soon-to-be spouse. For example, by using a QTIP Trust your spouse could continue to live in your home, but upon his or her death, your children, not the children of your spouse, would inherit the property.
Finally, the third consideration should be to consider naming a trust as the beneficiary of your life insurance. The trust can allow you to control when and to whom monies are distributed, so that you can provide for your spouse during his or her lifetime, and yet keep control over the proceeds. The trust can also protect your spouse from irresponsible spending, creditors, predators, and even estate taxes.
Do you have questions? We know this article may raise more questions than it answers. Our office is here for you and your loved ones. Please call us to schedule a meeting time.