According to the U.S. Census, a good number of Americans have been married more than once by the time they enter retirement. Among adults aged 60 to 69, 23% had married twice while around 10% had married three or more times. At age 70 and older, 22% of men and 19% of women had married twice. Meanwhile, 8% of men and 6% of women in the 70-plus age bracket had married three times or more. When people remarry and create blended families, estate planning can get complicated.
When You Leave It All To Your Surviving Spouse
Professional estate planners agree that a basic Will that leaves all assets to a surviving spouse is not enough to protect the biological children and grandchildren you have from a previous marriage.
Your surviving spouse may decide to change their own Will and leave all the marital assets they’ve inherited to their own biological children. In this scenario, your kids and grandkids get nothing.
Then there’s “The Spendthrift Spouse” who burns through everything leaving few, if any, assets for your biological children to inherit. Both of these scenarios are far more common than you may imagine.
“Instead of a trust, you can use your Will to specify how assets are divided among children, stepchildren, and grandchildren upon your death.”
Strategies For Protecting Yours, Mine & Ours
First, don’t put off discussing your estate with your spouse, your kids, and your stepchildren. Depending on your personal situation, there are different strategies you can consider:
- A Family Trust: Upon your death, all assets go into a combined Family Trust. Then the trustee you’ve selected can distribute assets according to your wishes to your surviving spouse, biological children, and stepchildren.
- A Marital Trust: All assets pass to the surviving spouse. However, you can specify which assets pass to children and stepchildren when your surviving spouse dies.
- Immediate Bequests: Instead of a trust, you can use your Will to specify how assets are divided among children, stepchildren, and grandchildren upon your death.
- Life Insurance: To make sure your biological children are taken care of when you pass away, you can take out a life insurance policy listing them as beneficiaries.
A Quick Note About Beneficiary Designations
If you can’t remember who you designated as your beneficiary for federal benefits that include a death benefit, you need to review them ASAP. If an ex-spouse is still listed as your beneficiary on life insurance, your Thrift Savings Plan (TSP), or a 401(k) they will get the money when you die.
To learn more about protecting your legacy, connect with an FRC® trained advisor in your area.
