How Second Marriages Can Affect Your Estate Planning
As a long time estate planning and elder law attorney, my clients have gone from mostly married couples at the beginning of my practice to a varied array of combinations of people who wish to provide for each other and their families. Often, I now see couples who have at least one prior marriage and have now come together, each having their own sets of children. So how can a second marriages affect your estate planning? My challenge is to ensure they can reach their goals within the parameters of their current relationship.
The tools of estate planning would typically be a will which each person in the couple would do individually and a revocable living trust which would be created jointly. Both can answer the question of who will receive your assets when you die. For a couple that comes into the marriage with separate sets of children, the questions involve not only, “What does my spouse receive if I die first?” but also, “How do I ensure that my own children receive their share, especially if I die first?” Believe it or not, in all of the many years I have been practicing law, there has never been a couple who did not ultimately agree upon a solution to their issues. First, it is important to note, under the law you cannot totally disinherit your spouse. Even if you specifically state in your will or your trust that you are leaving your spouse nothing, your spouse will be entitled to approximately one-third of your estate (the “elective share”).
In the case of a second marriage, if the parties are sufficiently financially secure, they may have agreed in advance that they will not wish to receive anything from the other’s estate. If this is the case, it needs to be put in writing. This can be accomplished by a pre-nuptial or post-nuptial agreement or a simple waiver of the elective share in the other’s estate. Each of these should be prepared by and executed under the supervision of an attorney to make sure that it will be binding after one of the parties dies. On the other hand, if both feel that they want to ensure that the other spouse is well taken care of, they may consider making the spouse a beneficiary of an insurance policy or retirement plan which will pass to them outside the will or trust.
Providing for the children is another matter. Children have no legal right to inherit from you but almost everyone wishes to leave their children at least part of their assets. What makes this complicated in the case of a second marriage is, how do you know that your children will actually receive their share if you die first? In many cases, couples wills have in their will that all children, whether steps or natural, will be treated equally as far as distributions with the underlying premises that their partner’s children are considered their own. This is a wonderful sentiment. But consider this: once the first spouse dies, what is to prevent the surviving spouse from changing his or her will and leaving everything to his or her own children. Regardless of the original intentions, wills are not written in stone. They are written on paper and can be changed by a new will. Of course, this comes down to a matter of trust which is an individual choice and well beyond the scope of a legal article. However, many feel that, for the sake of their children and for the security you can feel in your relationship by removing all doubts (like “what if he remarries?”), a legal solution is in order. One such solution is to have a joint revocable living trust which becomes irrevocable after one of the parties passes away. In the alternative or in combination with a trust are those assets which pass outside the will or trust such as life insurance or a retirement fund which can designate the children as beneficiaries. Bear in mind that certain retirement funds must by law designate your spouse as primary beneficiary so a waiver from the spouse may be necessary.
As you can see, second marriages with separate children pose specific issues when looking at estate planning for both of you. Since I am actually writing this article on Valentine’s Day, I am especially sensitive to emotions that may be brought up by such discussions. Nonetheless, my clients have always reported that getting together, having a frank discussion and arriving at a solution in the end, has been beneficial to all.
Sanford R. Altman, Retired, was a Senior Counsel member of J&G. For more information contact us by phone at 845-778-2121 toll free or 845-778-2121.