Retirement Accounts In Second MarriagesRetirement Accounts In Second Marriages
How to handle three common situations.
Estate planning is challenging enough when there’s a blended family of two spouses who each have children from a prior relationship. The problem can be compounded when a spouse’s assets are top-heavy with retirement accounts. Not only can these assets trigger potentially large income tax liabilities but also certain laws can interfere with the parties accomplishing their objectives.
Let’s address three common situations and the steps that can, or must, be taken for the parties to achieve their stated objectives with their retirement assets. The situations are:
Dividing the assets. “We want my children to get my retirement assets and my spouse’s children to get my spouse’s retirement assets.”
Avoiding disinheritance of children. “How can I use my retirement assets to benefit my current spouse without disinheriting my children from my prior marriage/relationship?”
Ex-spouse listed as beneficiary. “I’ve been married twice and divorced twice. I named my ex-spouse from my last marriage as the beneficiary of my retirement accounts, but I haven’t changed the beneficiary form since the divorce. Is that a problem for my children from my first marriage? I want them to get the assets.”
Dividing the Assets
It’s a common preference for clients who are entering into a second marriage to have their retirement assets inherited by their own children. The easiest w...
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