Documents, documents, documents! If you are in a second marriage, you can’t possibly have too many documents when it comes to the subject of distributing your estate. This is especially true if you have children from a former marriage – 65% of all remarriages involve children from former marriages.
Start planning early! Review all policies, and call Al Hehr in this office to help you put a plan into action that will protect your assets and your family, and will do exactly what you want it to do.
Begin with a prenuptial agreement, carefully spelling out how assets are to be divided up if the marriage ends either in divorce or death. These documents can be drawn up to protect all kinds of assets such as art collections, family businesses, and, of course, cash. All parties in second marriages should draw up a prenup as well as trusts.
Trusts are an excellent option for blended families. You can both provide for your spouse as well as for your children from a prior marriage. It allows you to direct certain benefits to your spouse and others to your children. One way to write this kind of trust would be to place a portion or all of your money and property in the trust for your spouse to use during his/her lifetime. When your spouse passes away, the entire trust can go to your children.
Now, here’s the problem with setting up this kind of trust. If your spouse is many years younger than you, that means there are many years that your spouse will be receiving the trust money. Unless your estate is huge, the money could all run out before your spouse dies.
A solution to this scenario could be to designate your children as beneficiaries of your life insurance policies and/or your retirement accounts. Thus, assuring that your children will get their inheritance immediately upon your passing, and you can leave most of your money and property to your spouse. Also, assuming that your spouse has fewer assets than you do, you can provide for him/her until you die, and have the remaining assets go to your children. This is done through a life estate commonly called a QTIP trust.
Among the documents that both spouses need are living wills that explain what you wish done in case you become ill and are unable to make decisions for yourself, and also a healthcare power of attorney to make medical decisions for you, if you are unable. In a blended family, it is advisable to select someone who gets along with all family members. Everyone should have copies of these documents, or at least be told who the individual is who has power of attorney, so that there are never any surprises for the survivors.
Because we know that you consider your family to be unique with its own unique challenges, Daniel N. Steiger, Esq. at Meyers Roman Friedberg & Lewis is here to help guide you and make sure that your goals are met. Call me at 216-831-0042.