Blended families are the norm anymore in America. If you have recently remarried, or are planning to remarry in the near future, you have likely given a considerable amount of thought to how you and your new, or future, spouse will handle financial matters. Unlike a first marriage, partners in a second, or subsequent, marriage often come into the marriage with children from the previous relationship as well as an existing financial and estate plan. Creating an estate plan that accounts for all of these pre-existing factors can be a monumental task. One of the biggest decisions that must be made is whether or not to combine any, or all, of your financial accounts with your new spouse.
How you feel emotionally about combining your finances with your new spouse can only be decided by you after careful thought; however, there are some practical and legal considerations that you should take into consideration regardless of how you feel emotionally about the concept.
State laws differ; however, in Missouri and many other states, once you mingle an asset, such as inheritance funds, with your new spouse it becomes marital property. If you wish certain assets to be earmarked for your children from a previous relationship, then you may wish to keep them separate from any marital assets. By the same token, family heirlooms or other specific assets that you wish to go directly to your existing children should be clearly marked as such in your Legacy Plan as part of your Trust or your Last Will and Testament.
On the other hand, if you wish for your new spouse to have immediate access to assets or funds in the event of your death, either for his or her own support, or to support any future children the two of you have, you may wish to convert accounts to joint accounts or payable on death accounts or even better, a trust. Simply bequeathing assets to your spouse in your Will does not allow immediate access in most cases as the assets will have to wait until the probate process is completed for distribution.
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- Leaving Assets Can Be Tricky – Part 3 - August 13, 2020