Remarriage and Estate Planning

Estate planning assumes significant importance in view of the above-mentioned conditions. If you apprehend facing a similar situation, it would be prudent to have a proper estate plan in order to overcome such complications. It would be best if you could do this just before remarriage, but even if you have already tied the knot, it is never too late. Firstly, both spouses need to sit together and formulate a plan about the estate. To begin with, both can prepare separate lists of assets that he/she is bringing into the marriage. Then you can share the lists and discuss the future financial issues that you will face as a couple.

For example, building a new house and the contributions each is going to make towards it. Retirement plans also need to be taken into consideration. It is vitally important to discuss how each would like his/her estate wishes to be carried out in the event of death of each spouse, especially with respect to children from previous marriages as well as the present one.

Make a list of life insurance policies each of you has with details of the company, death benefit amounts, and the beneficiaries and so on. Make sure that the name and other details of the beneficiaries are correct. Apart form the assets that may be acquired in the future, there may be inheritances that each spouse may have, which need to be disposed in favor of a particular set of children. There may also be a need to discuss the support of aged parents and whether suitable provisions need to be made in the estate plan.

It is best to take the help of an estate-planning attorney to prepare a formal estate plan. Where substantial property is involved in a remarriage situation, trust-based estate planning with two separate revocable living trusts, one for each spouse as grantor, is the correct way to go about it. Thus, each would have the right to sell, manage, spend, buy, invest or otherwise use the assets in his/her trust, even when the de jure owner will be the trust and not the individual person. When one spouse dies, his or her revocable trust is transformed into an irrevocable trust, with the surviving spouse having access to the income (even the corpus in certain cases), in addition to his/her own living trust. On the death of the second spouse the assets of the trust will be distributed to the grantors (first spouse) heirs and the assets of the other trust would be distributed among heirs of the second spouse/grantor.

While eliminating the complications discussed earlier in this article, trust formation in estate planning also leads to substantial tax benefits. It serves to avoid the costly, time consuming and tedious process of probate, allowing a much greater portion of your estate to be distributed among your loved ones instead of being wasted in taxes and undue legal expenditure.

California Tax Help is easier than ever with former IRS agent Murray and Young a Sacramento CPA Firm. To view our services and new articles for 2007 Estate Tax Planning please visit our award winning site


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2 Responses

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