Estate Planning in a Second Marriage: What You Need to Know in Arizona
Entering a second marriage in Arizona? Learn why estate planning differs with blended families and steps to provide for your surviving spouse, biological children from previous relationships, and prevent inheritance disputes.
Entering a second marriage brings joy, but also complex financial and estate planning considerations. How do you ensure your assets are distributed fairly for both spouses and respective children? What estate planning steps help smoothly blend families?
This guide examines key estate planning insights for second marriages in Arizona. Always consult with an experienced estate planning attorney if you need specific provisions and legal advice.
Why Estate Planning Differs in Second Marriages
Estate planning takes on heightened importance for couples in second or subsequent marriages. Unlike with a first marriage, you must make plans accounting for:
- Children from prior relationships and marriages
- Assets accumulated before the latest marriage
- Support obligations to ex-spouses per divorce agreements
- Desires to benefit the new spouse as well as biological kids
These factors make the estate distribution and estate plan more complicated. Failing to address these sensitively risks conflict between the new spouse (current spouse) and children from previous relationships. A previous spouse may receive assets as well. Estate planning helps preserve assets and inheritances for all involved.
Key Estate Planning Goals in Second Marriages
Arizona is a community property state. Some of the main estate planning challenges uniquely facing couples in second marriages include:
- Balancing Inheritances – The highest priority is often ensuring minor or dependent children from a previous marriage receive an inheritance, while also providing adequately for a surviving second spouse or her children. The estate planning process with a new spouse is challenging.
- Honoring One Spouse’s Wishes – Each spouse may favor passing certain assets onto their own biological children over stepchildren or leaving assets outright to their surviving partner depending on the relationship dynamics. You want to make sure you also honor previous spouse wishes as well in case your previous spouse passed away.
- Preventing Family Disputes – Disagreements may arise, especially surrounding inheritance rights to a shared home or other assets jointly purchased during the marriage. Laws treat marital property distinctly. You may want to create a trust before you get married or at least put a prenuptial agreement in place. An experienced estate planning attorney should guide you correctly.
- Considering Existing Obligations – Alimony, child support or division of marital assets from divorces impact what one spouse can leave to a surviving partner depending on legal obligations to an ex-spouse.
Skilled estate planning helps craft customized solutions addressing these common second marriage dilemmas. With forethought, you can protect inheritances for loved ones on all sides. That is especially important if your spouse dies.
Key Estate Planning Documents for Second Marriages
When entering a second marriage, these are key estate planning documents to consider:
- Prenuptial or Postnuptial Agreement – Outlines separate vs marital property and asset division if you later divorce. This overrides state laws.
- Wills – Spell out inheritance instructions separately for each spouse rather than relying on a joint will. Allows distinguishing assets by marriage.
- Revocable Living Trusts - Helps avoid probate and provides more privacy. Details property brought into the marriage vs acquired jointly. In a community property state like Arizona with great trust laws, a revocable living trust specially designed for a blended family is a great way to structure your estate plan.
- Healthcare Directives - Ensure you name the proper surrogate decision makers and preclude interference from ex-spouses through HIPAA waivers. You want the correct family members to help you in a crisis, which will most likely not include an ex-spouse. You may want your new spouse to make medical decisions for you.
- Financial Powers of Attorney - Appoint someone you trust to manage finances if unable, which is preferable to letting an ex or estranged family member control decisions. A former spouse will not necessarily have your best interest in mind.
- Life Insurance Policies - Name intended recipients as beneficiaries, which could differ for first and second marriage resources depending on who you want to receive death benefits. A great way to provide for a second spouse is to buy a life insurance policy for her. You can then leave other assets, like bank accounts, financial accounts, real property, etc., as your children's inheritance.
- Create a separate marital trust – A new marriage and estate planning are something to be considered seriously. We see more court litigation with a blended family. A second spouse may not get along well with your adult children, even if you previous spouse was deceased. Consider creating a marital trust that completely separates trust assets you accumulate when married with a first spouse. All the assets will be placed in a marital trust. Separate trusts are easier to deal with than joint trusts. You can make sure what your new spouse's rights are in relation to that trust.
These documents all allow customization to address unique second marriage circumstances compared to more standard joint estate planning.
How Property Ownership Impacts Estate Planning in Second Marriages
A key factor influencing estate planning in second marriages is understanding rules surrounding property ownership and rights. Several classifications exist:
- Separate Property - Assets acquired before the current marriage or received by gift/inheritance during. Considered individually owned.
- Marital Property - Assets accumulated jointly during the marriage. Subject to division upon divorce.
- Community Property - In AZ and select other states all property acquired during marriage is joint, no matter whose name is on the title or account.
Estate planning involves tools like wills, trusts, and beneficiary designations to direct these types of assets to intended recipients. Ownership and rights also influence tax planning. State laws affect how assets transfer at death. If a spouse passes away, there are also estate taxes implications that you should consider, especially if you own a house.
Retirement plans should be taken into consideration as well and the correct beneficiaries, as well as secondary beneficiaries, added to minimize taxes. A divorce decree will not automatically update beneficiaries in retirement plans.
Providing for Children from Previous Marriages
Marriage and estate planning should work together. One main estate planning goal with second marriages is ensuring minor or dependent children from your first marriage receive some type of inheritance. Tools to accomplish this include:
- Setting up trusts in your will earmarking specific assets for first marriage children.
- Utilizing life insurance policies and retirement accounts’ beneficiary options to provide death benefits directly to first marriage kids.
- Granting property like houses, land, or vacation homes via transfer on death deeds to children from previous marriage.
- Separating assets acquired before this marriage from joint marital property through a prenuptial agreement or a marital trust.
While caring for a surviving second spouse’s needs, these strategies guarantee assets pass to children from earlier marriages.
Supporting the Surviving Second Spouse
In addition to providing for biological children from previous marriages, crafting an estate plan for second marriages involves supporting a surviving spouse. This is where tools like:
- Joint or Two-Party Revocable Living Trusts work well by allowing the surviving spouse to utilize assets held in the trust.
- Making the second spouse the primary beneficiary of retirement accounts and life insurance policies.
- Allowing rights to remain in a shared primary residence via use of a life estate deed. This permits living there until death without gaining ownership rights to sell. We usually prefer to not recommend this solution if your adult children don't get along with your new spouse.
- Planning for paying off mortgages and covering ongoing living expenses also comes into play when looking out for a surviving second spouse.
- Addressing property like a vacation home you want to make sure stays in the correct bloodline. You may want to create separate trust documents for just that.
Preventing Family Inheritance Feuds
Blended families and second marriages have potential for disputes over estates. Actually, a new marriage and estate planning should be properly addressed.
That is why it is vital to use estate planning to preempt conflict. Options to help avoid infighting include:
- Addressing asset division explicitly in your will or revocable trust to leave no room for debate.
- If specific property is likely to cause friction, establishing a trust providing the surviving spouse usage rights without ownership control can ease tensions.
- Setting clear parameters for how sale proceeds from selling a jointly owned home will flow to respective children from each marriage.
- Making estate intentions transparent through open communication with family while arrangements are being made.
Taking these steps provides stability within stepfamilies and minimizes likelihood of legal challenges.
Key Takeaways for Estate Planning in Second Marriages
In summary, estate planning for second marriages often requires extra care to:
- Ensure minor children from previous marriages receive some inheritance using tools like protective trusts.
- Provide for a surviving spouse through joint trusts, beneficiary designations, and rights of residence.
- Prevent family inheritance disputes proactively by specifying asset division instructions and sale procedures in a subsequent marriage.
- Consider existing financial obligations owed to ex-spouses or children from first marriage. A previous relationship will affect your current spouse and plans.
- Differentiate separate property brought into this marriage from jointly-acquired marital assets.
While balancing these priorities poses challenges, proper estate planning helps smoothly plan for your loved ones’ wellbeing in a second marriage. Work with an experienced estate planning lawyer to thoughtfully address your unique situation for your marriage and estate planning.
Talk to an estate planning attorney today!
A second marriage and estate are an important step for soon to be married couples. Call Citadel Law Firm today. Our estate planning lawyers in Chandler, AZ will be pleased to help.
Call (480)565-8020 or click here to schedule your free consultation. We will be pleased to help.
