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The second time around

Smart estate planning can reduce snags and maintain harmony in your second family.

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Second chances can bring a lot of joy, particularly when it comes to getting remarried. But tying the knot again can present some challenges, especially when it comes to planning how you’ll provide financial support for “blended family” members from different marriages after you’re gone.

It’s never easy to talk about what happens when you die and who gets what afterward. However, if you've been married more than once, and especially if you have children from different marriages, clear and comprehensive estate planning becomes increasingly vital.

Estate planning for blended families may certainly present a higher level of complexity. Each spouse may have brought different assets into the marriage and may have different objectives when it comes to passing wealth among children from different marriages or to each other. However, if you discuss these matters openly as a couple, consult with estate planning professionals, and express your intentions clearly through legal documents, you’ll likely be able to create a plan that addresses the needs of your blended family.

Talk it out: Initiate a family conversation

Before putting your estate plan in writing, talk with your spouse about your goals, how you hope to provide for each other, and to what extent you want to leave assets to your children. “Clarity up front is absolutely critical,” says Christin Haley, vice president of trust administration with Fidelity Personal Trust Company, FSB. Since the conversation could be uncomfortable, consider including a trusted financial adviser or estate planning attorney “to facilitate the conversation and take the emotion out of it,” says Haley. Some topics to cover include:

  1. Financial or other contractual obligations you may have with former spouses through a divorce agreement
  2. Long-term goals, including how you want to support each other and what you may hope to provide for your children (biological and step) or other family members
  3. Guardianship issues, particularly where there may be young children or former spouses in the picture

Review the plans from previous marriages

Review any plans you had in place with your first marriage, including wills, trusts and beneficiary designations, “to understand how any of these arrangements might impact your plans moving forward,” says Ajay Sarkaria, a senior wealth planning specialist at Fidelity Investments. For example, if you were contractually obligated through a previous divorce to keep your ex-spouse as beneficiary of a retirement account, you may not be able to update the beneficiary designation to your current spouse.

Put your goals and wishes on the table

Put all your intentions and goals on the table, “even if you’re making tough decisions, like treating one set of children differently than another,” says Sarkaria. Without clear communication, you risk heartache. Imagine a spouse who passes away and leaves everything to her children from a first marriage, unbeknownst to her surviving spouse who may not have enough income on which to live.

Plan it out: Have a solid estate plan in place

Once you’re clear on your long-term planning goals, look at your assets and property to determine what’s “yours, mine, and ours.” For a blended family, this may be somewhat daunting. But it’s an important part of estate planning, because the way assets and property are held in ownership now can directly impact how they may be distributed in the future.

Together or separate

How do you decide whether to commingle or separate marital assets? While it’s a very personal choice, considering several factors could help you find clarity:

  1. What you brought in. Often couples who come in with significantly different amounts of wealth—like inheritances, college accounts, or trusts earmarked for children from a previous marriage—will choose to keep these assets separate. Some couples then choose to commingle whatever they earn together.

    Children could also play a big role in whether you commingle or separate your assets. “Sometimes your plans revolve more around who you bring into the marriage rather than how much,” says Haley. Spouses who have children from a previous marriage often feel strongly about setting aside assets just for them.
  2. Your age. Haley notes that younger couples tend to commingle their assets more because they often come into the marriage more or less on equal footing.
  3. Marital property laws in your state. Be sure to understand the consequences of any state laws governing the way you hold assets. What if you live in a community property state? “While property acquired by either spouse prior to marriage—or an inheritance or gift received during the marriage—may retain its character as separate property,” says Sarkaria, “any income or assets that can’t be identified as separate property are likely to be considered equally owned as community property of the couple.”

Account titles

The way you own and register accounts in your blended family can go a long way toward clarifying your intentions and avoiding probate—the expensive, time consuming, and very public process of administering an estate. For example, accounts owned as “joint tenants with rights of survivorship” or “transfer on death” make the owner’s intentions clear that in both cases the assets go directly to a party named on the account. Read Viewpoints: Account designations.

  • Joint tenants with rights of survivorship passes the assets directly to the surviving account owner.
  • Transfer on death passes the assets directly to the party named as beneficiary.

Check your Social Security benefits

While you might be entitled to Social Security benefits based on your ex-spouse’s work record, that could change upon remarriage. For more information, read: Benefits For Your Divorced Spouse.

Account designations

Be sure to review and, if necessary, update all your beneficiary designations on retirement accounts, life insurance policies, and so on. If you don’t, says Haley, “Your assets could end up going to your ex-spouse when your intent was for them to support your current family.” Also, think carefully about whom you choose as beneficiary. You might automatically name only your new spouse, but when you die, your spouse can name anyone he or she wants as the new beneficiary, possibly bypassing your children altogether.

Take similar precautions with property. The way a home is owned could affect how it passes upon death—and that could create unintended hardship for a family. For example, if you want your spouse and your children to benefit from the proceeds of your house, make sure your legal documents reflect these intentions. If properly established, certain types of trusts, as you’ll see below, can help you transfer property in line with your wishes.

Spell it out: Consider wills, trusts, and taxes

What you decide to leave to your spouse and children from your present and previous marriages is very personal. Putting it all in writing is essential. “Even if what you plan seems to favor some blended family members over others, spell out every detail in your legal documents,” says Sarkaria. “That’s the best way to avoid potential disputes.”


Use wills, or even “an instruction letter referenced in a will,” to be very specific, says Haley, even for seemingly small things like dividing up personal property. “Leaving your children to decide who receives something like a college ring could result in bad blood among family members,” she adds.


As an integral part of a carefully crafted estate plan, a trust holds assets on behalf of a beneficiary or beneficiaries and can specify exactly how and when the assets pass to the beneficiaries. For a blended family, trusts not only help facilitate the disposition of assets by detailing who gets what, they “can last for years—through the surviving spouse’s lifetime, the kids’ lifetimes, and for multiple generations,” says Haley. What’s more, because trusts tend to avoid probate, beneficiaries may receive assets more quickly than if the assets are transferred through a will.

For this reason, many parents use trusts to segregate assets for children from a previous marriage even before getting remarried. A will can even be drafted to provide for the “pouring of assets into two separate trusts—one for children from your previous marriage and one for your spouse or children from your current marriage,” says Sarkaria.

Also, while disclaimer language in trusts provides for flexibility to decide later how to carry out the deceased spouse’s wishes, it also leaves a lot up to chance. The surviving spouse might not provide for family members precisely as the deceased spouse desired.

For blended families, certain types of properly established trusts can provide financial support for your spouse and still make sure something is left for your children.

  • A Qualified Terminable Interest Property Trust (QTIP) can provide income and even principal (if needed) for a surviving spouse, while preserving the underlying assets and controlling how they are distributed to children or from a previous marriage, or to other beneficiaries.
  • An Irrevocable Life Insurance Trust (ILIT) holds a life insurance policy (on the policyholder’s life) and provides immediate benefits when the policyholder dies, without the necessity of passing through probate. Read Viewpoints: Can life insurance help your estate plan.

Consider the consequences: taxes

Estate planning in subsequent marriages often involves balancing control over assets and tax consequences. Consider taking full advantage of your estate and gift tax exclusion, which lets you make gifts during your life or make transfers at death without paying federal estate tax on exemption amounts up to $5,340,000 (in 2014). New as of 2012 is a portability provision that lets a surviving spouse use the estate tax deceased spousal unused exclusion (DSUE) of his or her deceased spouse. This means that if you’re the surviving spouse, you could potentially pass assets of up to $10.68 million when you die, depending on your own gifting strategies during your lifetime.

But there’s a catch: Only your last deceased spouse’s unused exclusion amount is portable. That’s an issue when you remarry. If your new spouse dies before you do, he or she becomes your “last” deceased spouse and you can no longer use any unused exemption amounts from your previously deceased spouse. However, there may still be an opportunity to utilize any unused DSUE from a previously deceased spouse by making additional gifts during life, before either spouse passes. Your attorney or tax adviser can help you assess this opportunity.

Estate planning for second families requires a mix of many things—candor, communication, and very carefully crafted legal documents. Still, “While there can be some discomfort in talking about and making your estate plan,” says Sarkaria, “there is great comfort in having that plan in place.”

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Fidelity does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Fidelity cannot guarantee that the information herein is accurate, complete, or timely. Fidelity makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation.
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