Your second marriage and your assets

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 Q. I did a will with my first wife. She passed away, and I’m thinking of getting remarried. My girlfriend and I each have kids from our previous marriages. I have far more savings than she does. How do we decide what to do with the assets we have already, and whatever else we save, so each of our kids is treated fairly?

A. Every couple should ask this question before they get married.

A prenuptial agreement can be helpful, not because of the potential for divorce, but because you each have your own property that you are bringing to the marriage, said Nancy Heslin Reading, an estate planning attorney with reading Law Firm in Newton.

When you’re married, you’ll have to make many of the same decisions other couples will, but your choices are especially important because you each have children from your previous marriages.

Who will pay the mortgage? Utilities? Health care bills? If either of you run out of money, then what? Will there be joint assets? Are any of the assets from when either of you lived in community property states?

You’ll need some documents to make sure your affairs are handled the way you want, and that means you need an attorney.

“You want it to be someone who is comfortable working with your attorney, because each of you will need a set of estate documents that work hand in glove with the pre-nup agreement,” Reading said. “In New Jersey, as a rule of thumb, you must leave at least 30 percent of your estate to your spouse. The devil is in the details and there are many, but broadly speaking that is what the law says.”

She said some couples will, in their wills, leave the minimum 30 percent to their spouse, with the remainder passing to their children from the first marriage, Reading said.

Reading said another popular planning option is to leave your entire estate in trust with the income from the trust paid out to your spouse as long as your spouse is alive. Then upon your spouse’s death, the trust remainder is paid out to your children from the first marriage. This way your estate takes care of both your spouse and your children from the first marriage, she said.

“If you opt for this kind of will, be sure that your children understand that they will not inherit from you immediately upon your death,” she said. “Lots of will contests are initiated by children from the first marriage because they do not understand the kind of estate plan that was utilized.”

Often couples throw their hands up and say, “This is too complicated. Let’s just do simple wills.” A simple will says, “I leave everything to my spouse, and if my spouse predeceases me, then in equal shares to my children,” Reading said.

“Of course, you can do this. However, if you then predecease your second spouse, all of your estate then passes to your present spouse, and when your spouse dies, all of your money will pass under your spouse’s will to your spouse’s children,” she said. “Your children will not get anything.”

That kind of situation also often ends up in court, Reading said.

She said she’s seen couples agree to name their children and their stepchildren in both wills so that everyone gets something.

“Sometimes this works, but sometimes after the first spouse dies, the surviving spouse comes in to redo his or her will, and name only their own children as beneficiaries, eliminating the children of the deceased spouse. Nasty,” she said.

Reading said some couples, after discussing all these possibilities, decide not to marry after all. And for some, that’s a good idea.

“There are serious tax implications either way that must be weighed,” she said.

Your assets aren’t the only issue that should be addressed, Reading said. You should also talk about debt.

“Once you marry, except in a few instances, you assume your spouse’s debt,” she said. “If you or your spouse has a lot of credit card debt, for instance, that debt becomes marital debt upon your marriage.”

It’s just another hard question you should ask before tying the knot.

Email your questions to moc.p1540236148leHye1540236148noMJN1540236148@ksA1540236148.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.