New Marriage or Partnership? It’s Time to Update Your Estate Plan

Gerry Turner, the first “Golden Bachelor, ”a widower, and his wife, Theresa Nist, a widow, started divorce proceedings just three months after their televised wedding. Their marriage and subsequent divorce emphasize the importance of estate planning in remarriages or domestic partnerships where one or both partners was previously in a committed relationship.

Previous relationships come with legal concerns: children, pre- and postnuptial agreements, divorce agreements, business arrangements, unequal wealth between partners and outdated estate planning documents. These issues and others should be addressed early  by putting together new estate plans with your new spouse.

Although it may be difficult, the first step is to discuss your plans with family members. The next step is formalizing your plans through your estate plan. The goal is to avoid probate. Whatever the specific scenario, it is important to consider these eight factors:

1. Are the estates of both parties equal? If the individuals in a newly married couple are not equally wealthy, legal documents like a prenuptial agreement or an agreement to keep your estates separate should be considered before an estate plan is drafted. The goal is to have an estate plan that ensures your wishes will be carried out for your new spouse/partner as well as for others you care about.
2. Whose name is on the deed to the house? If you moved into a house that was owned by one spouse prior to the marriage, it is important to consider what will happen to the house if one of you dies. You do not want to leave your partner without a place to live.
3. Who inherits specific assets? The new estate plan should indicate who inherits items such as heirlooms, artwork and jewelry. Specific wishes should not simply be voiced but set out in writing.
4. Do you both have powers of attorney and Advanced Directives? POAs are important documents that give the person you name legal authority to act on your behalf, making decisions for you if you become incapacitated. Advanced directives are also important documents that give the person you name legal authority to make important medical decisions. Who will have guardianship of minor children? All aspects of what may happen to children from a previous relationship need to be considered and a plan should be formalized within your estate plan. If you were previously married, some decisions may be governed by the divorce decree.
5. Who will have guardianship of disabled or special needs children? As with children from previous relationships, the future requirements of disabled and special needs children must be addressed. The issues that need to be considered include what type of trust needs to be established to protect the child’s income, who will be the trustee of that trust and who will have guardianship of the child.
6. Will beneficiary designations change as a result of your new relationship? Retirement plan (e.g., 401(k), individual retirement accounts, Roth IRAs) beneficiary designations generally take priority over estate planning documents. Be sure to update the beneficiaries in all such accounts so that the proceeds are handled according to your wishes. Similarly, you may wish to update beneficiary information for financial assets such as bank accounts, brokerage accounts and insurance policies. Business assets are another asset category that must be addressed.
7. How will you handle federal and state taxes? Taxation rules are different for married and unmarried couples at both the federal and state levels. Other taxes to be considered include capital gains, gift and income taxes.

It is important to remember that new relationships do not change old ones. If you come to your new relationship with your own home, assets, collectables, traditions, children and grandchildren, creating a new estate plan can be complicated as you try to balance the needs and expectations of your new spouse/partner with the needs and expectations of the people who have been in your life for years.

These emotional considerations must be further balanced with complicated financial rules and regulations that limit the choices you have if you want to minimize the amount of tax that may be due. Consulting an estate planning attorney and a financial advisor who can guide you in making the best decisions for you is part of the prudent course of action.

Do you have questions?

Count on your experienced team at Ericson, Scalise & Mangan, PC to provide you with sound guidance for your Estate Planning, Elder Law, Real Estate, Probate, Trust & Estate Administration, and other legal needs. For assistance, contact us today at (860) 229-0369, or email us at info@esmlaw.com.