As a Houston estate planning attorney, I often have clients who are entering into second marriages and want to make sure that their assets and their children are protected in the future. If you’ve been divorced and are considering remarriage or have recently remarried, you need to consider an asset protection strategy for your future and the future of your children. A review with an attorney of an asset protection strategy prior to your next marriage could protect your assets in the event of another divorce in the future.
An effective asset protection strategy consists of one or more tools that are designed to protect each spouse’s interests in the event of a subsequent divorce. Below are some of the issues that need to be addressed when addressing asset protection for second marriages:
Children. If you want all or some of your assets to pass to your children rather than your new spouse, this needs to be addressed as part of your estate plan. This is usually addressed in your Will, and consists of specifying which assets you want to leave to your children and specifying that those assets are left in trust (rather than outright) to your children. By placing the assets in trust for your children, you protect the assets from the creditors of your children and you also protect the assets from any failed marriages of your children.
Property. A prenuptial agreement will generally include provisions stating how each spouse’s property will be treated coming into the marriage as well as how the property will be disposed of in the event of divorce. For instance, in Texas (a community property state), a prenuptial agreement might state that the property owned by each spouse prior to the marriage will remain the separate property of that spouse. The agreement may also state that the income from each spouse’s separate property will remain the separate property of the spouse (by default, income from separate property is community property).
Beneficiary Designations. In estate planning, many people often overlook the importance of updating beneficiary designations following a divorce. With regards to 401(k) plans, IRAs, and life insurance policies, the person named as the beneficiary under the contract will be the person who inherits the asset when you die. Any updates to your will or trust will not be sufficient to change the beneficiary of these plans or policies. For this reason, it is critical to ensure that you regularly review and update the beneficiary designations for your retirement plans and life insurance policies.
Many times, a person gets married for the second time when they are older and have acquired some wealth that needs protection in the event of a future divorce. With a little careful planning, you can protect your assets for yourself and your children. If you’re contemplating marriage, you should speak with an estate planning attorney your asset protection options.