Estate planning for second families often gets overlooked. The irony is that these situations typically require the most planning.
In Michigan, a person who passes away without an estate plan will have his or her assets distributed under Michigan’s Intestate Succession statute. This one-size-fits-all approach often misses the mark. These laws rarely take into account the issues facing a second family situation.
For instance, given a choice, a spouse may choose to treat his or her second spouse differently depending on whether or not there are children from the previous marriage.
The good news is that proper planning will allow a person’s assets to be distributed in way that seems fair to all the heirs.
A separate trust can ensure that assets are available to a spouse during his or her lifetime and then go to the children upon the spouse’s death. This is a common practice that allows people to support their surviving spouse and make sure their children receive an inheritance.
Proper planning may also include prenuptial or postnuptial agreements. These are an efficient way to make sure the children are treated fairly.
Life estates are another tool for second families. These agreements allow a surviving a spouse to remain in the marital home for his or her lifetime no matter who owns the house.
In a second marriage, these issues and many others should be discussed and considered with an estate planning professional.