Estate planning after remarriage can be complicated, especially when there are children from a previous marriage. By law, new spouses have similar rights to spouses of first marriages. Families, and children of the first marriage in particular, often do not see it this way. Most people think that a prenuptial agreement is the sole solution to this problem. However, spousal rights can complicate matters.
The February 2016 edition of Journal for Financial Planning had a great article, titled “Estate Planning Implications of Remarriage” that addressed this issue and ways to reduce or eliminate these rights, as well as other matters to consider.
Importance of Remarriage
1. Create a Life Estate
If both you and your new spouse have estate plans that include a home, you can create a “life estate” for the surviving spouse. The contract gives the survivor the right to live in the home until he or she dies or moves into a nursing home. The home passes on to children and/or other heirs. You may want to include money to cover maintenance and other expenses.
2. Pay Less in Taxes
Congress has made marriage less taxing for couples, you may pay less in federal income tax compared to singles. If you’re married and sell a home, you can exclude up to $500,000 in capital gains on the sale as long as you or your spouse has owned the home and both have lived in it for 2 out of the 5 years before the sale.
3. Share Assets and Costs
When you get remarried, you have a fresh start in a new home. But keep in mind that if you’re not on the deed or lease, your property may not be protected by the owner’s homeowners insurance. You may want your attorney to create a shared property agreement that spells out the terms, i.e., how much you will contribute to paying the rent or mortgage.
Implications of Remarriage.
Many people who have been divorced end up getting remarried. Whether they remarry with their previous partner or a new partner, remarriage can present several legal implicatons. Depending on state laws, remarriage can affect the following:
1.Deal with Estate Plans
Sorting out your estate plan may not be easy because you and your new partner may have children and heirs that you want to inherit your assets. Combining your estates or executing a new one may become overwhelming. On top of this is your state’s law. For example, Florida’s “elective share” law requires that 30% of your estate go to your surviving spouse.
2. Loss of Benefits
Are you widow or widower who is younger than age 60? If you get remarried, you’ll lose survivor benefits based on your deceased husband or wife’s earnings. If you receive social security benefits, you may lose them if you get remarried.
3. Pay More for Health Care
When you remarry, you may be responsible for your spouse’s long term medical care costs. If your spouse doesn’t have a health care plan and has to be admitted to a nursing home, the cost could deplete your estate.
4. Unanticipated Issues
Getting remarried with children, whether they’re adult or young, may bring with it unanticipated issues from shared parenting tasks to uniting families. You may have to deal with hurt feelings, jealousy, anger, and other emotions that will it may arise in the process.
Other Implications are
1. Alimony or Spousal Support
Spousal support will usually end when the partner receiving the support remarries.
2. Child Support and Custody
Remarriage can affect court orders for child support, custody, and visitation. If the custodial parent gets remarried, the child support may be greatly reduced or even terminated.
3. Inheritance Provisions
Remarriage can change the way that property is distributed in a will or trust. Remarriage may even affect the children’s ability to inherit.
A prenuptial agreement, antenuptial agreement, or premarital agreement (commonly referred to as a prenup), is a written contract entered into by a couple prior to marriage or a civil union that enables them to select and control many of the legal rights they acquire upon marrying, and what happens when their marriage eventually ends by death or divorce. Couples enter into a written prenuptial agreement to supersede many of the default marital laws that would otherwise apply in the event of divorce, such as the laws that govern the division of property, retirement benefits, savings, and the right to seek alimony (spousal support) with agreed-upon terms that provide certainty and clarify their marital rights.
If you would like to learn more about the necessity of estate planning, any one of our estate planning attorneys would be happy to assist you.