Estates,Trusts, Wills, Legacy Preservation, and the Impact of Divorce and Remarriage
In my experience, one thing that can cause tremendous heartache and the absolute breakdown of a family is when things have not been clearly communicated regarding the wishes of an individual when it comes to planning for the end-of-life scenario. Historically, folks from my parents’ generation and prior were content knowing they had created a will to make sure their heirs were taken care of after their passing. Today, there are a lot more variables that need to be considered prior to setting up end of life plans. It is much more common today to have divorce and/or blended families through remarriage to be taken into consideration for planning purposes. Let’s look at things to consider and things to avoid.
Estate planning plays a pivotal role in managing one's assets and ensuring a seamless transfer of wealth to future generations. In the intricate landscape of blended families, divorce, remarriage, and the desire to preserve a lasting legacy introduce additional challenges. In this article, we will delve into the complexities of trusts, wills, and estate planning, with a specific focus on the impact of divorce and remarriage, as well as considerations related to Social Security survivor benefits.
The Complexities of Blended Families:
Blended families, formed through remarriage and often comprising children from previous unions, require a nuanced approach to estate planning. Balancing the financial needs and expectations of both the current spouse and children from prior marriages is paramount to prevent potential disputes and safeguard the intended legacy.
Wills, Probate, and the Divorce Factor:
A will is a fundamental legal document outlining asset distribution after death, but its efficacy can be complicated by divorce and remarriage. Divorce may invalidate certain provisions, leaving assets vulnerable to unintended beneficiaries. Additionally, remarriage introduces new family dynamics that must be carefully considered in the will. Probate, the legal validation of a will, can become more intricate, potentially leading to delays and heightened family tensions.
Pour Over Trusts:
Pour over trusts prove invaluable in estate planning for blended families. These trusts complement wills by facilitating the transfer of any assets not explicitly included in the will into the trust upon the individual's death. This strategy helps circumvent probate for those assets, streamlining the distribution process and minimizing potential conflicts.
Living Trusts and Divorce Considerations:
Living trusts, or revocable trusts, offer a proactive approach to estate planning, allowing individuals to place assets into a trust during their lifetime. In the context of divorce, living trusts provide flexibility, allowing for adjustments to the trust's terms and beneficiaries as circumstances change. However, careful consideration and potential revisions may be necessary to ensure the living trust aligns with post-divorce wishes and obligations.
Social Security Survivor Benefits:
For individuals with a history of divorce and remarriage, Social Security survivor benefits can play a crucial role in estate planning. Remarried individuals may be eligible for survivor benefits based on their former spouse's work record. Understanding the implications of these benefits, and whether they should be included inside a trust, requires careful evaluation of individual circumstances and professional guidance.
Communication, Professional Guidance, and Legacy Preservation:
Effective communication is paramount in navigating the complexities of estate planning within blended families, particularly when divorce and remarriage are involved. Seeking the advice of legal and financial professionals specializing in estate planning for blended families ensures that strategies align with both individual goals and legal requirements. This holistic approach not only addresses immediate financial concerns but also contributes to the preservation of a lasting legacy that reflects the values and priorities of the individual and their blended family.
Call for a complimentary consultation and have our team review your needs. We take a holistic view of finding the right resources for each client’s specific needs. You can reach us at 775-325-4649 or email us at info@mvplwrc.com.
By: Valerie Clark, Retirement Specialist and Financial Literacy Instructor