Multiple Marriages Can Make for Complicated Beneficiary Designations

8:33 pm Asset Protection, Estate Planning

marriage and money 150x150 Multiple Marriages Can Make for Complicated Beneficiary DesignationsSince multiple marriages are quickly becoming the rule rather than the exception in the U.S., this can lead to confusion when designating the beneficiaries of a life insurance policy or other assets.  Ensuring that a current spouse and children from a previous marriage are all provided for can lead to a situation where no one is happy if estate plans are not made carefully.

If your first spouse is still named as beneficiary of your life insurance policy, you need to change that designation – unless, of course, it is part of your divorce agreement that your ex has to remain as beneficiary.  If that is the case, you may want to purchase additional life insurance to benefit your new spouse.  But before you do, consider this:  if your new spouse inherits the proceeds, there is no guarantee your children will benefit.  If your children inherit, your new spouse may not get anything.  What can you do to protect both?

One solution would be to create a revocable trust and name that trust as the beneficiary of the life insurance proceeds.  When you die, the proceeds will fund the trust and then you can specify how the funds are distributed.  You could either give both your spouse and your children access to the trust funds, or you could give your spouse access alone until he or she passes, and then the trust goes to the children.

As you can see, choosing a beneficiary is not always as simple as it may sound.  You probably need to consult with an Orange County estate planning attorney to determine the best strategy for your personal circumstances.

Get started by contacting our Orange County asset protection estate planning law firm as soon as possible.

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