We’ve talked about estate planning on the blog before. But if you’re a divorcee that’s approaching retirement age and are thinking about tying the knot again, there are specific considerations to be aware of.
Here are five things to think about when creating an estate plan with your soon-to-be spouse:
1. Talk to each other!
Good communication is essential when discussing estate planning with your partner. This is doubly true if either of you has an ex-spouse or children from previous marriages.
Some divorce decrees require an ex-spouse to be named as a retirement plan beneficiary. If so, make sure your estate plan accounts for this. You should also consider how you want to provide for your children (including those from previous marriages, shared children, and stepchildren).
2. Review your assets together and figure out who owns what.
When there’s no clear answer on ownership, you’ll have to choose whether to commingle it or keep it separate. There’s no single best way to do this – it all depends on your situation, especially if one half of the couple has significantly more wealth than the other.
Whether or not both partners have biological children with previous spouses may also determine ownership of assets. And there is the question of what the law says. Divorce laws varies by state, but if you live in a community property state, remember that just about anything acquired over the course of the marriage is viewed as equally owned by the couple.
Want to discover more about retirement planning? Attend our online workshop!Register Now
3. Check all designations on retirement plans and insurance policies.
Make sure the named beneficiaries on each account truly reflect your wishes. Many people don’t realize that beneficiary designations on IRAs and 401(k) plans override wills. Let’s say you’ve named your intended beneficiary for your retirement assets in your will. If a different person is the designated beneficiary on the actual account, that person is entitled to those assets! So make sure to update your beneficiary designations on each account as needed.
4. Create advance directives for your finances and your healthcare.
Giving someone financial power of attorney will allow them to handle your bills and file your taxes. A healthcare proxy (or medical power of attorney) may make critical decisions regarding your health if you become disabled or incompetent. These don’t have to be the same person, and some experts even argue that these roles should definitely be filled by more than one person.
5. Consider a prenuptial agreement.
Prenups have become more common these days. If you’re coming into a marriage with assets and liabilities accrued over your life (as well as children from your first marriage), it may seem like common sense to get a prenup. Many people want to leave money to their biological children and a prenup can help ensure that happens. An estate plan may be changed at any time without a prenup to cement it.
Developing a good estate plan can be hard enough for individuals and couples in first marriages. Divorce and children from previous marriages makes estate planning even more complex. That’s why it’s best to work with an experienced financial advisor who can guide you and your future spouse through the process. Click here to request a no-cost, no-obligation conversations with one of our advisors.