This is an article from Kulas Law Group (https://www.kulaslaw.com/) in Port St. Lucie, Florida, that we thought others may find helpful.
Estate planning in the 21st century can be a complex, and complicated, endeavor. Often, the reason for the increased complexity of proper estate planning is because divorce and remarriage are commonplace. Consequently, it is often necessary to protect and provide for a current spouse as well as for children from a previous relationship. Unfortunately, many parents are unaware of the consequences of failing to plan, thereby putting their children’s intended inheritance at risk.
America’s Blended Families
Most American have heard the statistics. About one in every two first marriages end in divorce. The odds are even less encouraging for a second or subsequent marriage. Although your estate plan may not be the first thing you think about when you contemplate the fallout from a divorce, it most certainly should be one of the things you consider. Before divorce was commonplace, estate planning was less complicated. Generally, spouses would create reciprocal estate plans, meaning the first spouse to die would gift all his/her assets to the surviving spouse. The surviving spouse would then oversee gifting all remaining assets to the couple’s children at the time of death. This simple, yet effective, strategy works just fine if the children are also your spouse’s children; however, if the children are from a previous marriage, you may find yourself in the proverbial “muddy waters.”
Why Is Estate Planning So Important if You Have Children from a Previous Marriage?
Although you may not want to consider the possibility, the reality is that if your current spouse is not your children’s other parent, he or she may not feel the same obligation and/or desire to share the estate they inherited with your children. Moreover, they are not legally required to do so. Imagine, for a moment, that you spent a lifetime working hard, saving routinely, and investing wisely, all with the intent to leave an inheritance for your children when you are gone. Your first marriage ends in divorce, but you find love again and remarry. Fast forward several decades to your own death. Your entire estate goes to your spouse pursuant to the plans you made with him/her. As part of that plan, your spouse is to protect, and eventually, gift your remaining assets to your children upon death. That plan, however, is far from legally binding. Worse still, your spouse either squanders the assets or directs that they be gifted to someone other than your children after his/her death. Either way, your children end up with nothing. The good news is that with careful estate planning you can prevent such an outcome.
Protecting Your Children
One of the most common of all estate planning mistakes is failing to update an estate plan when a life event should prompt an update. Divorce and remarriage are two such events. Just as you need to update your plan when you get divorced to remove your now ex-spouse as a beneficiary, Executor, or Trustee within your plan, you also need to revise your plan when you remarry to both include your new spouse and protect any children from your previous marriage. There are numerous estate planning strategies and tools that can help you protect your children. Creating a life estate in real property is a popular strategy because it allows your current spouse to remain in the marital home but ultimately gifts the home to your children upon the death of your surviving spouse. Creating an irrevocable trust is another option that legally removes chosen assets from your estate and protects them until your children reach the designated age you have chosen. Consult with an experienced asset protection lawyer to decide what strategies and/or tools are best in your situation.