Clients embarking on a happy new chapter in life are unlikely to put estate planning on their pre-wedding to do list, but it’s an important factor to consider.
It’s even more essential to issue a timely reminder to your clients when it’s not a first marriage, or there are children from a prior relationship. According to Pew Research Center, 40 percent of marriages in the US are a remarriage for at least one partner.
Indeed, estate planning is often neglected. Planning site USLegalWills.com suggests that more than 60% of Americans don’t have a will, and another 9 percent have one that’s out of date. This could present a problem for a new spouse, children or both. Clients need to remember what could happen if they shuffle off the mortal coil without making adequate preparations. Assets are passed on based on each state’s intestacy laws, and the law might not see things the way your client does. The surviving spouse, for example, could end up with the bulk of assets with children left out in the cold.
Life insurance is an important part of the equation, and remarriage means that beneficiaries may need to be changed. Power of attorney and health care directives also need to be updated. After an acrimonious divorce, for example, your client might not want to be left with the former spouse deciding whether to pull the plug. Moreover, these documents should specify a guardian should one need to be appointed.
The way property is titled is also a matter of concern, as in the case of joint tenancy with rights of survivorship. In this case, assets pass automatically to the surviving owner. If your client wants assets to someone other than a spouse, the assets should be titled accordingly.
Particularly in the case of substantial assets, prenups and postnups might be crafted to limit the rights automatically assigned to spouses. Physical personal property is also important to mention. If your client has family heirlooms or articles of sentimental value to go to a specific person, they need to make explicit mention in the will. Trusts are a valuable tool as well, particularly the bypass trust, which would allow a surviving spouse to enjoy benefit of assets until death, but then the assets revert to children or other heirs as specified.
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Remarrying? Update your estate plan | CNBC