A second marriage brings unique estate planning needs. Although some may view the need to discuss an estate plan as a relatively morbid topic, the discussion can prompt a conversation about future goals.
Five specific documents to discuss when outlining these goals include:
1) Will. This estate planning document provides an opportunity to specifically outline who you want to get what. You can better ensure your intended heirs benefit from your estate by actively reviewing and updating this document on a regular basis. Certain life events will also trigger an update, like a second marriage.
2) Trust. If drafted wisely, a trust can further protect assets and better ensure distributions move forward as intended.
3) Health care proxy. A health care proxy is a legal document that provides guidance on your wishes regarding medical care in the event of incapacitation. The document will also give another the power to make decisions regarding your medical needs. A failure to update this document can result in your ex having a say on medical decisions in the event you are incapacitated.
4) Durable power of attorney. This is another legal document that is triggered in the event of incapacitation used to provide another individual with the ability to make financial decisions on your behalf.
5) Beneficiary designations. Many financial accounts have beneficiary designations. Some examples include retirement accounts, insurance policies and bank savings accounts. If triggered, the funds in these accounts automatically transfer to the individual listed as the beneficiary designation. These designations are very powerful and will generally trump instructions within one’s will. Contact the financial institution and ask to update this information to avoid an unintended beneficiary.
A failure to take these steps can result in unintended consequences. This is particularly true for those with children from a previous marriage. A failure to proactively protect assets can result in unintentionally disinheriting children.
A prime example is a family home. Unless action is taken to specifically address these assets, it would most likely transfer to the spouse at the time of death. You can reduce the risk of this and other unintended consequences by taking action and protecting your assets. An attorney experienced in this area of the law can discuss your options.