Remarriage and Estate Planning
Statistics indicate that 50% of divorced individuals remarry and 60% of first time remarriages end in divorce (the divorce rate increases for subsequent remarriages). Remarriage creates special issues, including the protection of pre-marital assets, the provision for spousal and child support related to prior marriages, and the limitation of the rights each party has against the other by virtue of the marriage.
Lawyers have lots of tools in their tool bag to deal with these issues. They include Prenuptial Agreements, Qualified Terminal Interest Property Trusts, life insurance, and documents relating to medical care in the event of incapacity and bodily remains after death.
A Prenuptial Agreement is a contract between unmarried individuals. It provides for the financial relationship of the parties during the marriage (including the liability for future health care or nursing home expenses), the division of property in the event of divorce, and the disposition of property upon the death of either spouse. Under Ohio law, surviving spouses have an automatic right to receive a portion of a spouse’s probate estate (sometimes referred to as an “elective share”) unless that right is waived in a Prenuptial Agreement. This elective share exists even if the Will of the deceased spouse leaves all of their assets to their children from a prior marriage. If the deceased spouse has no Will, a spouse (regardless of the length of the marriage) still has the right to receive a portion of the probate estate of the deceased spouse. These issues can be addressed with proper planning.
A Qualified Terminal Interest Property Trust is a type of trust that allows a person who is remarrying to make sure that their spouse is provided for during their life, without disinheriting children from a prior marriage. It has the added benefit of allowing for the deferral of estate taxes until the death of the surviving spouse, a “win-win” situation for all!
Another “win-win” in a remarriage can be the use of life insurance. The purchase of a life insurance policy naming the second spouse as the beneficiary can provide for them at little expense to children from a prior marriage. The big decisions will be the amount of insurance coverage (determined by the price of the premium) and who will be the owner of the policy (which carries with it the right to name the beneficiary of the policy).>
Other issues of remarriage include, who will make medical decisions for “Mom or Dad”, and whether life prolonging treatment will be utilized. The creation of legal documents like a Living Will and Health Care Surrogate (or Durable Power of Attorney for Health Care) can resolve these issues before they arise.
Effective communication and proper planning can result in long, happy marriages, and less conflict in the event of disability, divorce, or death!