Many people in Washington are approaching or well into middle age before they really start considering an estate plan. At this point a great number of people have entered a second or even third marriage and may have children from a prior marriage. Estate planning for a second marriage can be complicated, so it is important to learn everything possible for creating an estate plan that provides not only for both spouses upon one or the other's death, but each spouse's children as well. Those who want to learn more may want to consider scheduling a consultation with a knowledgeable attorney at Baxter Legal Services at (425) 686-0574.
Washington Is a Community Property State
According to the Washington State Legislature, Washington is a community property state. What does this mean in terms of estate planning for a second marriage? Basically, property acquired following marriage is considered the property of both spouses and is divided equally should the marriage end. This means that for those who have children from a prior marriage, a spouse may entrust one-half of assets considered community property to their child or children. Washington state's intestate succession laws under RCW 11.04.015 state that when one spouse passes, the other will inherit half of any separate property and children will inherit the remaining half when the deceased did not have a Last Will and Testament in place.
Estate Planning Prior to a Second Marriage
Obviously, it is better to plan for the future of a new spouse and any biological or adopted children before a second marriage takes place when possible. There are a number of things to consider in estate planning.
Create or Update a Will
A will is important to have for anyone entering a second marriage. Those who already have a will should consider whether their will needs to be revised. According to the Washington State Bar Association, a will allows the executor to designate beneficiaries who will receive certain assets or cash values following their death. A will can help loved ones avoid arguments and disagreements during a time that is stressful.
Prenuptial agreements are valid and acceptable in Washington courts. A prenuptial agreement is a contract made between both partners and determines how assets and debts will be divided if the marriage is annulled, dissolved, or one spouse passes away.
Revocable Living Trusts
A revocable living trust is an estate planning tool that gives control of all assets owned by the trust to the Trustee while they are living and can be amended or revoked at any time when the Trustee is alive and is mentally competent. Like a will, a revocable living trust allows the creator to specify beneficiaries who will receive assets upon the creator's death. This document is one of the most important for those in a second marriage because it can be amended, unlike an irrevocable living trust, which cannot.
Irrevocable Living Trusts
An irrevocable trust is designed to shelter the assets held for children from both divorce and creditors. This type of trust prevents designated assets from becoming those of a future spouse in the event of divorce.
Those with questions about estate planning should feel free to reach out to Baxter Legal Services.
Questions to Consider in Estate Planning for a Second Marriage
There are some very important questions to consider when it comes to a second marriage and estate planning. Some of these include:
- Which assets will each spouse continue to hold separately from the other?
- Do either or both spouses have a will that should be amended?
- Are there bank accounts, a marital home, vacation home or any other assets that will be retitled in both spouses’ names?
- Will a new will be established?
- Are debts being brought into the marriage by either spouse, or will new debts be incurred following the marriage?
- For couples bringing children into the marriage, which assets will be left for each of them?
- What assets will be held for any children you have together in a second marriage?
- What estate planning tools may be needed in addition to a will?
Discussing these and other questions often helps partners avoid potential conflicts regarding estate planning and helps each party better understand the other's point of view.
When Prenuptial Agreements are Beneficial
While any couple can draw up a prenuptial agreement prior to marriage, there are certain circumstances in which this estate planning tool is especially beneficial. It is important that both partners are fair, honest, and transparent when drawing up a prenuptial agreement so there are no issues with lawyers or the court if the marriage fails to work. A prenuptial agreement is particularly beneficial when:
- One spouse owns a business
- A new spouse has substantial debts
- One spouse has an income far greater than the other's
- One spouse has significant investments
- A spouse has children from a prior marriage along with family property to be inherited and passed along by the children
It can be difficult to start a conversation about a prenuptial agreement, but it is important from an asset protection perspective.
Beneficiaries and Trusts
In second marriages, some of the most common issues include appointing beneficiaries for IRAs, life insurance policies, and other accounts or income plans. This is not so difficult with a first marriage, however there may be substantial conflict when it comes to a second marriage. A new spouse can name anyone of their choosing as a new beneficiary and promises made during the marriage may be broken when a spouse dies. One way to avoid conflict is to use a trust as a beneficiary for tax-deferred income plans and life insurance policies. This gives a spouse control over how income and assets are distributed, as well as whom they are distributed to. A trust can provide protection from creditors, estate taxes, divorce, and irresponsible spending.
Consider Scheduling a Visit with Baxter Legal Services
Estate planning for a second marriage is often complex and, in some cases, confusing. Considering there may be biological or adopted children, stepchildren, an ex-spouse, a new spouse, and children shared by spouses involved, it is no wonder those entering a second marriage need skilled guidance and support. Those needing assistance regarding estate planning in Washington may want to consider reaching out to a knowledgeable attorney at Baxter Legal Services at (425) 686-0574.