How to Avoid Accidentally Disinheriting Your Kids After Remarriage
Although establishing an estate plan is the first step in keeping your assets accounted for in the future, keeping it up to date can prove to be more challenging. With any major life events, your estate plan documents should be reevaluated to account for your new situation. In the case of remarriage specifically, individuals may risk accidentally disinheriting their dependents unless they take the proper steps to update their existing estate plans.
After a divorce or spousal death, 17% of individuals remarry, and in those who are over 55 years old, 50% remarry. Considering the 55+ year-olds have already amassed a large portion of their lifetime earnings and are more likely to have had children, their estates tend to be more complicated than their younger counterparts. Insurance policies, family heirlooms, real estate, and more can all be affected by a new spouse.
A good first step is to make sure your beneficiaries are still accurate on your different accounts and policies. Beneficiaries listed will take precedence even over the wishes stated in your estate plan. For 401(k) plans as well, your current spouse will be your beneficiary unless someone else is explicitly noted and your spouse agrees. Even if you intended to have your children inherit some of these assets, without that clearly stated you might not be able to control the result.
For property, jointly owned homes are typical in remarriages, which may change the portion that would be left to your kids. Many homes will be left to the remaining spouse under “tenancy by entirety.” For those who want to leave their portion to someone else like a child, “tenancy in common” is what would need to be established. Evaluating your property title and communicating with your spouse and a specialist will allow you to best determine where your property stands now and in the future.
For physical and other belongings, your estate plan should be as transparent as possible similar to your beneficiary wishes. Being concise will only help your loved ones avoid confusion and stress in an already difficult time. Lastly, it’s important to realize that estate planning rules can differ by state, so consulting an estate planning expert is the most effective solution to make sure your assets are handed down accordingly.
Though your options are virtually limitless, proper estate planning -deciding on the “who, what, when, and how” and executing this with the least amount paid in taxes, legal fees and court costs possible can be a challenging and emotional affair to wrestle with alone. For more information, contact Talley LLP today.