Did you remarry and do you have children from a previous marriage? If you don’t have a will, your children from the previous marriage can go through probate after you die to assert certain inheritance rights. However, under state intestacy laws, your current spouse may have the right to receive more of your estate than you intended.
For this reason, you may want to codify your wishes within a will. To be extra secure, you may also want to set up a trust for your children.
Keep your separate property separate
One of the most important aspects of leaving money for children from a previous marriage is the maintenance of separate property. If you have separate property — whether it is a bank account, investment account or real estate that you owned before the marriage — you should not “commingle” these assets with the marital estate. In other words, do not put your spouse’s name as co-owner on these assets, don’t use these assets to invest in or make improvements to marital property and don’t deposit any of these assets into a joint account.
If you are strict with the maintenance of your separate property, you can determine whomever you want to be the beneficiary of this property. In addition, you can also decide who should inherit your portion of your marital estate.
Consider the creation of a trust
The creation of a trust will add additional security to your children’s inheritances. Here are some of the benefits:
Bypass probate: The trust will bypass long and costly probate proceedings — and your children will be able to receive their inheritances right away after you die.
Protection from your spouse: A trust will also protect the assets from your current spouse. Remember that people change after a death and family arguments can erupt easily over inheritances.
Protection from your child’s spouse: Inheritances you bequeath in the name of your child — and your child only — are “separate property,” so the court will allow your child to keep this property in the event that he or she gets a divorce. However, if your child doesn’t organize the assets well and mixes the property into his or her marital estate, then your child’s spouse could take a large portion of the property through divorce. A trust will prevent this “commingling” of assets from happening.
Protect your children’s inheritances now
You never know when you’ll take your final breath, so when it comes to estate planning, “now” is always better than “too late.” Protect your children’s inheritances as soon as possible. This way, you’ll receive the peace of mind of knowing that they will benefit from your legacy after you’re gone.