LOVE AND $$ THE SECOND TIME AROUND

Neal A. Deutsch, CFP^®

Published in Rivertown Journal, December 2010

As an estate planner, many of the requests I get from new clients is to plan the family estate the second time around- namely second marriages. The first time around is easy…you're young (well... younger!), have little assets, no real estate, no kids- it's easy. But, when getting married or partnering the second time, it may be a bit more complicated.

Going through a divorce is not fun. Regardless of the reasons you decide to part ways, the separation of property can be daunting. Taking emotional trauma out of the equation for a minute, it's about who gets what- think of it as a business deal. Through the years, you accumulate stuff from trips, holidays, birthdays and of course, sales! Anyone who has gone through this process knows it can be a heart wrenching process and you feel the world is coming to an end.

And then, lo and behold, you meet Mr. or Ms. Right. Hmmm...life is good again!

There is a big difference however- you each have stuff. Real estate, retirement accounts, savings and investments, dogs and cats, timeshares and oh yeah- kids. Welcome to the world of blended families. If all goes well and everybody gets along, the pleasure of "acquiring" new children and grandchildren is a beautiful and wonderful feeling as your family grows. Life gets better and love blossoms. However, there is always an undercurrent brewing- "if I die, will my kids get what was mine before getting married, or will it go elsewhere? If it was mine before the marriage, how do I see to it that it stays on my side of the family?" It's an understandable and justifiable question.

Estate planning is the act of doing just that: planning your estate for any contingencies that may occur and to see to it that your wishes get carried out to assure the smooth transition of your estate via intergenerational planning and specific bequests. The tricky part is to make sure your spouse is taken care of in the event of you predeceasing her or him, while making sure your "stuff" ends up in the right hands. With the proper planning including sensible and reasonable decisions, this can be executed on paper relatively easily and the issue of taking care of your surviving spouse and the right beneficiaries ending up with their rightful inheritance is not at all difficult.

Trust planning can be utilized to accomplish your goals and provide for the ultimate disposition of your estate in a calm and orderly fashion. A trust is an entity, just like a person. It has its own tax ID number and files a tax return each year. The main difference between a trust and a will is the property owned by the trust at the time of your death will not go through probate, which can be a timely and expensive process. If it is your desire to avoid probate, you may transfer your assets into the trust which will avoid the probate process entirely which greatly increases the speed in which your assets are transferred to your heirs, and may cut down on expenses to the estate dramatically due to less taxation, legal costs, etc. Depending on the structure of the trust, assets may be a "revocable" transfer, or an "irrevocable" transfer, meaning you give up ownership and use of the assets. Not ready for this yet? Let's move on...

Another way of taking care of your spouse for life and transferring your assets and stuff to your side of the family may be a simple clause in your will which states that before the kids get the money, it is used to support your spouse for life first. In this case, the will would state that the beneficiary of your assets is a marital trust, which is put in place after your death. The money is then held by the trust, managed by a trustee (of your choosing) and will be utilized solely to support your surviving spouse for his or her lifetime. Thus, the goal of supporting your surviving spouse for their lifetime is achieved, as well as directing who and where the assets will eventually to, called the remainderman. This may be your children, grandchildren, church or temple, firehouse or any person or entity that you choose to benefit eventually. The choice is yours- you are only limited in your estate planning by the laws of the land and your imagination. Be sensible, be kind and I suggest you don't have favorites- it may cause family strife long after you are gone. You want to be remembered for the kind and generous person you are, not for splintering your family.

Each family or business situation is different, and there are dozens of strategies than can be utilized depending on the individual circumstances. While it sounds simple, consult your Certified Financial Planner™ or estate attorney to work out how estate planning tactics and strategies may be utilized for your second-time-around estate plan. Work with someone who has experience in this area of planning, and has experience in this area of planning. It's your life, so make sure it follows your wishes and desires… and don't forget to live today while you are planning tomorrow!

"May you have a wonderful, safe and happy holiday season. My best regards to you all!"

If hearing from me once a month isn’t enough, come visit me in our new blog site at www.chestnutblog.com.  If you think I’ve got pearls of wisdom here…you ain’t read nothin’ yet! See you there!

Neal A. Deutsch is a Certified Financial Planner^™  & Registered Securities Principal, offering securities through First Allied Securities, Inc., member FINRA/SIPC.  Neal is President of Chestnut Investment Group in Suffern, NY, helping people with financial planning since 1984. Please feel free to call Neal at (845)369-0016 or email him with your questions at neald@chestnutinvestment.com.

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