Divorce can be tough for children to cope with. They’re suddenly having to shuttle back and forth between both parents, splitting their time and energy in new ways. What happens when a stepparent is introduced into the equation?
An estimated 50% of US children aged 13 or younger live with one biological parent and that parent’s new partner. The emotional impact of a parent’s second marriage will vary based on a variety of factors, as will the long-term financial impact.
If you’re getting remarried, it’s time to start thinking about protecting your children. This may include efforts like improved communication and family counseling. It should also include financial planning.
Read on to learn how to protect your children with estate planning when you’re getting remarried with these seven tips.
1. Consider a Prenuptial Agreement
No one wants to think about their impending marriage coming to an end, but the divorce rate in second marriages is statistically higher than it is in first marriages. When you’re entering a second marriage with significant premarital assets, you may want to consider creating a prenuptial agreement with your new spouse.
If a divorce leaves your former partner at a financial disadvantage, you may be expected to pay alimony. A prenup will ensure that you remain in possession of your premarital assets so that you may then use them to support your children as you see fit, even in the face of alimony.
2. Review Guardianship Designations
If you began the process of estate planning during your first marriage, you may want to review any guardianship designations you made for your children. Who did you previously name as the guardian of your children in the event of your death and the death of their other parent? Does that designation still stand?
Guardianship designations for children of divorce can become tricky when both biological parents are in disagreement. For example, you may want your new spouse to become the legal guardian of your children in the event of your passing and your former spouse may not approve of this plan. An attorney can review your will and provide legal guidance to protect your best interests.
3. Update Account Beneficiaries
It is common for married individuals to name their spouses as their beneficiaries on retirement accounts and other assets. When children are involved, the expectation is often that the spouse will use those assets to provide for the children. However, this may not be the reality when your spouse is not the biological parent of your children.
With the help of an attorney, review all documents that name your beneficiaries. Determine which assets, if any, you wish to go to your new spouse and which assets you want to go directly to your children. It is best not to operate on the assumption that either your new or former partner will use assets left to them to support your children.
4. Create an Airtight Will
As estate planning attorneys, one of the biggest issues we see in clients who are getting remarried is a simple will that leaves room for error. While it may seem straightforward enough to use language like, “I leave everything to my children,” vague and overarching statements are often considered open to interpretation. What about property and assets owned jointly with your second spouse?
An airtight will specifies who will receive each of your assets that do not have a named beneficiary (e.g., cars, liquid funds, and high-value belongings) and under what circumstances they will receive them. Not only should you revisit your will before a second marriage to modify any statements regarding your former spouse, but you should also create an airtight outline of everything your children and new spouse will separately inherit.
5. Create a Trust for Your Kids
Depending on the age of your children, you may need to set up a trust in order for them to receive their inheritance. While minors can receive an inheritance, they cannot manage that inheritance until they are at least 18. That means that someone will have to manage it for them and by creating a trust, you can determine who that person is, whether it’s your spouse, a relative, or a professional financial advisor.
When creating a trust, you can also determine when that trust no longer requires third-party management. The earliest that this can occur is when your child turns 18, but you can also set a later date if you’re concerned about your child’s ability to manage their inheritance at such a young age.
6. Close Joint Accounts from Previous Marriage
When parents think about protecting their children when getting remarried, they typically think about their new spouse’s involvement. However, you should also take into consideration your former spouse’s involvement with your current assets.
Whether or not your first divorce was amicable, it’s recommended that you close all joint accounts from your previous marriage. This will eliminate the possibility of becoming responsible for any debt your previous partner may accrue after your divorce.
7. Prevent Probate
Your ultimate goal is to provide enough legal protection over the assets you’re leaving to your children to avoid probate. Probate will occur if there is good reason to contest your will, which can happen if:
- You were deemed incompetent at the time of writing your will
- It can be argued that you were coerced to write your will a certain way
- Your will was not notarized and there were no witnesses to your drafting and signing of the will
If you die intestate, meaning that you left no will, probate is a guarantee. When your estate goes into probate, your children may have to fight other parties for their right to an inheritance.
Prioritize Protecting Your Children in a Second Marriage
When you’re getting married for a second time, you’re creating a blended family. While the impact of a second marriage on children varies from one family to another, one thing remains consistent. Protecting your children requires financial management.
Rhodes Law Firm is here to review your will and estate planning to ensure legality and airtightness. Contact us today to schedule a consultation to learn more.