Remarrying? Give consideration to how a second marriage could affect your Estate Plan
Congratulations, you’re getting remarried! You know about the birds and the bees … so let’s talk about the dollars and cents.
Here are some of the financial considerations of a second marriage, and how it could affect your Estate Plan:
1. Ensure your will is up to date in reflecting your wishes.
Getting (re)married does not automatically revoke an existing will, unless that will includes a clause stating it was made “in contemplation of a future marriage”. Without this phrase, or making a new or amended will, your previous spouse – even if you’ve divorced him or her – will be entitled to a preferential share of your estate.
Furthermore, even if your will specifies what happens if you remarry, your new spouse could appeal on the basis that he or she is dependent on you.
One way to avoid confusion is to have a domestic contract, which sets out the terms of your relationship and is signed by both parties. Another is to transfer your assets to your children’s names, making them beneficiaries on your registered accounts (RRSP/RRIF, TFSA), and insurance policies, or trusts in their name.
2. There’s more to balancing your finances now.
A second marriage often means increasing the amount of people in your life, and your responsibilities. Your spouse. Your minor children. Adult children who cannot earn a living due to a disability.
“One question many clients have is how to provide for children of a previous marriage as well as your new spouse”, says Educators’ Certified Financial Planner professional Marian Ollila. “It is possible to ensure an estate provides for all and avoid the unfortunate scenario where a surviving spouse brings a dependent support claim against the estate. The establishment of a spousal trust allows a surviving spouse to benefit from assets during their lifetime before the remainder is transferred to other beneficiaries after the survivor’s death.”
Life insurance can also be used to benefit two different groups …where one can designate a person as the beneficiary of a life insurance policy, but leave other assets to another person or group.
3. Providing for step-children.
You should know that non-adopted step-children have a different legal status than adopted step-children. In fact, if you do not make a valid will and your estate is to be divided among your spouse and your children, the term “children” only includes blood or adopted children.
4. Update your beneficiaries.
Do not assume your divorce decree or separation agreement changes your beneficiaries for things like your life insurance policies and RRSP. They do not.
A second marriage is a big step that will involve many people around you.
A financial specialist at Educators Financial Group can answer your questions about how remarrying will impact your financial plan and estate planning. In fact, we help education members with all their financial issues. Have questions? Contact us today.
This information is provided for informational and educational purposes only. It should not be treated as legal advice. If you require legal advice, contact a lawyer.