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    How a second marriage affects estate planning

    Decisions regarding wills, living trusts, and power of attorney critical when forming a blended family

     

    Prenuptial agreement. This is no longer the exclusive domain of the rich and famous. A prenuptial agreement is often designed to protect assets before entering a second marriage and preserve wealth for the children of your first marriage. It may also be coordinated with other rights and responsibilities (eg, conditions for a second spouse to act as executor of your estate).  

    Also see: This trust may benefit special needs individuals

    Power of attorney. A power of attorney is a legal document authorizing the attorney-in-fact to act on your behalf. With a durable power of attorney, the power continues if you become incapacitated. The decision as to whom to designate as the attorney-in-fact can be a critical one for blended families.

    Retirement plans and IRAs. It is likely that much of your wealth is in qualified retirement plans, such as a 401(k) and traditional or Roth individual retirement accounts. Beneficiary designations should be updated as soon as certain life events occur, such as divorce, marriage or remarriage, or a birth. The retirement plan and IRA designations on record with the plan administrator or IRA custodian at the time of your death supersede any declarations in your will or other documents.

    Read: Can life insurance be used to pay estate taxes?

    Life insurance. As with retirement plans and IRAs, you may be inclined to amend your life insurance beneficiary designations. Alternatively, you might revise the percentages of proceeds going to the respective parties. Once again, these beneficiary choices take precedence over any other designations.

    Next: QTIP trust 

    Joel M. Blau, CFP
    Mr. Blau is chief executive officer of MEDIQUS Asset Advisors, Inc., in Chicago. He can be reached at 800-883-8555 or [email protected]
    Ronald J. Paprocki, JD, CFP, CHBC
    Mr. Paprocki is chief executive officer of MEDIQUS Asset Advisors, Inc. in Chicago.

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