In our previous post, we began looking at the types of complications remarriage can pose for estate planning. We noted that one potentially difficult situation is remarriage to a noncitizen, and that encouraging the establishment of an independent trustee and giving one’s children the right to periodic accounting of trust assets can help allay their fears of the noncitizen spouse leaving the country and complicating the estate plan after the death of their parent.
Another potentially irksome situation is remarriage to a much young spouse. In these situations, the remainder of assets left in trust to the second spouse often end up going to heirs others in the family of the second spouse.
One remedy for that situation is to establish life insurance trusts with one’s children as the beneficiaries, and then place those accounts in a trust and dividing the estate from the trust. This must, however, be done correctly to ensure that heirs can stretch out distributions from the trust based on their life expectancy.
A third situation that can complicate estate planning is remarriage to a spouse who ends up having health problems. An example of this would be a woman who remarries to a man who ends up needing nursing home care for dementia. But if that woman has children from a previous marriage, she may still wish to provide for them.
It is possible to establish an estate plan that allows that woman to provide only as much money for her second husband as he needs, and to give the rest to provide for her children. A good estate planning attorney will be able to draft documents so as to allow that woman to exercise control over where her funds go, and how much goes to each purpose.
Source: Chicago Tribune, “Your circumstances can complicate estate planning,” Janet Kid Stewart, 13 May 2011.