Just about everyone should have an estate plan. However, you really need an estate plan if you are in a second marriage.

If a spouse in a second marriage dies without a will and has children from a first marriage, then roughly speaking, half of his or her property goes to the living spouse, and the other half goes to the deceased spouse’s children.

I say “roughly speaking” because, at least under Wisconsin law, it gets rather complicated as to who would receive which property because it depends on how the property is titled, whether the property is beneficiary-designated, and whether the property is considered marital property and part of something called the augmented deferred marital property estate.

As such, one way to avoid these complexities is for the couple to have a prenuptial agreement. Generally, in the cases of a second marriage, the primary concern when entering into a prenuptial agreement is not so much how the property will be divided upon divorce, but instead how the property will be divided upon death. A prenuptial agreement can dictate how property is divided upon death.

Joint estate plan

Another option for the couple to consider is a joint estate plan. Too often, however, the type of estate plan I see is one that leaves everything to the living spouse on the first death, and then on the second death, to the children of both spouses.

The problem with this type of estate plan is that typically — though not always — the living spouse has the power to change the estate plan such that the living spouse could leave all of the property only to his or her children (leaving the deceased spouse’s children with nothing).

Sometimes couples in a second marriage do not have many assets. In those situations, it can seem to make sense to leave everything to the living spouse on the first death, trusting that the living spouse will not change the estate plan to exclude the deceased spouse’s children. However, even if the living spouse does change the estate plan to exclude the deceased spouse’s children, it is less of an issue because the couple did not have much to begin with.

Life insurance

One option to consider is for each spouse to obtain a life insurance policy that would be beneficiary-designated to each one’s children, with then all or most of the other assets going to the spouse to ensure the deceased spouse’s children do receive something. If there is no prenuptial agreement and the couple resides in a community property state, such as Wisconsin, then the other spouse should sign a document waiving his or her right to such insurance proceeds.

It is also possible for the couple to each have their own estate plans and to leave their property where they want it to go. Again, this can get complicated because of how the property is titled. Also, if you are married to someone, hopefully you can agree with your spouse as to where your property should go upon your death rather than having to make separate estate plans.

Granted, there are many situations where the living spouse will honor the deceased spouse’s wishes and not change the estate plan, such that both spouses’ children will inherit upon the death of the second spouse. I would suggest that if you own a farm or other business, you take matters into your own hands and have a clearly defined estate plan.