Families in New Jersey come in all shapes and sizes. Sometimes after the death of a spouse or a divorce a person remarries creating an entirely new family dynamic, especially if they have adult children from their prior union. While stepchildren and stepparents can get along relatively easy at times, other times conflict arises. This is especially true when it comes to estate planning. The following three tips are key to ensuring your estate plan protects those you love and those who are new in your life.
Tip 1: Ensure your beneficiaries are up-to-date
Many people include life insurance policies, retirement accounts and bank accounts in their estate plan. These accounts generally designate a beneficiary to receive the account assets when the account holder passes away. If you remarried, you should ensure your deceased spouse or ex-spouse is not listed as a beneficiary. In addition, you can name your adult children as secondary beneficiaries if you wish, so they will receive account assets if both you and your new spouse pass away.
Tip 2: Update your will
Oftentimes when a married person dies their surviving spouse inherits under their will. After the surviving spouse dies then their surviving children divide what remains of the estate. If you remarry following a death or divorce you should update your will to ensure your surviving children and stepchildren will receive their share of your estate as you deem fit. If not, the possibility arises that your new spouse could inherit your entire estate and when he or she dies, the remainder of the estate will go to his or her surviving children, bypassing your own adult children entirely.
Tip 3: Give gifts while you are still alive
Under federal law you can give anyone up to $15,000 tax-free. In addition, your spouse can also give anyone up to $15,000 tax-free. This means your child could receive a $30,000 gift — $15,000 from you and $15,000 from your spouse. You do not even need to let the Internal Revenue Service know about the gift. Gifting is advantageous because you can see your loved ones enjoy the gift and it can reduce conflict amongst adult children.
Learn more about estate planning
If you remarry, you should review your estate plan. Changes may need to be made to accommodate your new spouse and stepchildren while still protecting the inheritance of your children from your previous union. Estate planning can be complicated; our firm’s website on the topic may help you understand more about your rights and options.