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Remarriage – Money Discussions and Impact on Estate Planning

In this ongoing series, Getting Real, we talk about the Tough Talks estate planning lawyers undertake with their clients.  Remarriage is a common topic.  We previously discussed the high percentage of people that remarry or enter into a partnership after they are 55 years old. This statistic has increased over time as we pointed out last in our blog, Remarriage – Partner.

The concern is that they say that the primary cause of divorce among couples is “Money”. This needs to be an issue that needs to be nailed down by a couple before they end up in a new marriage/partnership. The big question is, “How will the new couple handle money?” A lot of this is based on what they know and have done previously in the prior marriage or relationship, did they have completely joint money, some joint money and separate money, or totally separate money?

It is one thing when everyone is 20 years old, has no money, is starting out and the goal is to stay alive while you are trying to advance careers, pay for housing, raise kids and possibly put money aside to put children through college or even grad school. It is a totally different issue when people are getting together in their 50s, 60s, and 70s. They have separate adult children that they have known longer than the person they are coupling with. They may also feel an obligation to those adult children monetarily.

Estate Planning:

The issue is not only how are they going to handle money when they are together as a couple, but also include how will they handle their Estate Plans?

  • When the person passes are they going to leave some portion of their assets to their new partner to help the new partner for the rest of their lifetime?
  • Will they leave all their assets to their adult children?
  • Will they have leave some assets for that partner and leave other assets for their adult children that they have known longer than the new partner?
  • Will they have money for the surviving partner in some version of a Trust that helps provide for them during their lifetime, and then whatever money is left after the partner passes on, goes back to their adult children?
  • What about grandkids?

These are issues that a couple should consider as they look towards re-entering into a marriage or partnership. It’s hard enough to adjust to someone else in your life after you have been alone for a long time, without adding the friction of having preconception as to how a partner would spend money while they are alive, let alone when they pass on.

Continue to Modify Your Estate Planning:

In any Estate Plan there are three (3) pieces that are always changing for any and all Estate Plans. These include: (1) Your relationships change; (2) What you own changes; and (3) the Law changes.

Your relationships will move in and out based upon travel, time and distance. Some relationships just fade out, while new ones are born and grow stronger. What you own will change in that you may change banks, investment houses, residences, and automobiles. The Law will change regularly. Right now in North Carolina there is no Estate Tax/Inheritance Tax. There has been in the past, and there might be in the future. Right now the Federal Estate Tax/Inheritance Tax does not hit until you own approximately $11.25 million dollars. That is a high number that not many people will hit.  However, that number may be lowered. The elections swing back and forth and different parties come into control in the White House and Congress. When they do the laws, including Tax Laws, regularly change.

Your Senior Re-Marriage/Co-Habitation Relationship may change over time. If you become more appreciative of your partner and the efforts they have made for you, it is more likely that you will leave more of your estate for their benefit. Also, over time you may see that they need more financial help than you had originally anticipated. Also, if your other heirs or family are not as loving, kind or decline to be in a close relationship with you, as they may have been before the remarriage, then you may desire to give them less inheritance. All of these things change over time. All of these factors may change how you modify your Estate Plan.

You need to keep your Estate Plan current with: (1) What you own; (2) Your relationships; and (3) the changing Tax and other Laws. Hopefully your relationship with your new partner grows even sweeter over time. That may create a stronger desire to help take care of them after you are gone. Also, if your other beneficiaries are less in a relationship with you, you may want to change the inheritance amount to them. If they are more in a relationship with you, and accepting and loving of your new partner, then it may be the opposite.

We will have more “Tough Talks” in our future Blogs. Stay tuned.

At the Law Firm of Steven Andrew Jackson, Attorney and Counsellor at Law, we have helped hundreds of families protect themselves and their loved ones, avoid Estate Taxes and Probate Costs, and keep their Estate Plans current with the law through The Customized Protective Estate Planning Solution™.