Fifty-seven percent (57%) of widows over the age of fifty-five (55) get remarried after losing their loved one. See https://www.cnbc.com/2019/01/17/estate-planning-for-second-marriages-when-you-have-kids.html. Most of those individuals bring with them assets that were accumulated during a lifetime worth of work and savings during their prior marriage. It is critical that the newly blended family members discuss on the front end how their assets are going to be handled and plan accordingly. Failing to have the discussion and even worse, failing to plan appropriately, can result in your children being disinherited when that was never your intent. Take for example the case below of an individual who attended one of our workshops.
Risk of Disinheritance Through Remarriage is Real – Case Study
St. Charles Estate Planning Attorney, Rosalind Robertson recalls very clearly the risk associated with failure to plan. “After a speaking engagement I was approached by a female attendee who was interested in finding out about how to make sure the assets that she brought into the second marriage from her deceased husband would pass to her children. She felt like her assets should pass to her children and the assets that her second husband brought to the second marriage, which were considerably less, should go to his children,” explained Attorney Robertson. “Her problem was compounded by the failure to plan ahead and plan out how they were going to handle the assets. In her case, she simply combined her assets with her new husband into joint accounts. While we can still plan around the combination of the family’s assets, it now requires the cooperation of her new husband because they both have an ownership interest in the joint assets,” indicated Attorney Robertson. “Unfortunately, for this woman the new husband was not interested in working together to make sure each family received the assets from their respective side of the blended family. It is hard to overlook that his side of the family could only win, he did not have that many assets to bring into the marriage and if he outlived his new bride, his family would receive a financial windfall. By combining the assets with her new husband with no planning, the poor woman had placed her assets in limbo, if she were to predecease her new husband the assets would all belong to him and her children would be unintentionally disinherited. This is a perfect example of why it is so important to plan ahead when you are getting remarried,” noted Robertson.
Examine Beneficiary Designations in Conjunction with Remarriage
You need to pay careful attention to the beneficiaries you designate on your accounts. Documents such as your beneficiary designation, pay on death and transfer on death forms control the disposition of your assets. See http://joneselderlaw.com/?p=739. The person or persons you list as the initial beneficiary on those forms will be the recipient when you are gone if they survive you. St. Peters Estate Planning Attorney, Stephen Jones noted “A few years ago a family came to us looking for help on getting their late father’s assets back. Their mother had legal documents that left everything to the children. The problem was after getting remarried, she had changed the beneficiary of most of her and her late husband’s investments to her new husband. This trumped her legal documents and had the effect of almost entirely disinheriting her children.” Forms designating your beneficiaries are just as important as the legal documents you are doing and should always be reviewed as part of your estate plan. As noted in Kiplinger, who you want as beneficiaries change over time and these documents must be reevaluated periodically, such as when you are widowed and considering remarrying. See https://www.kiplinger.com/article/retirement/t021-c032-s014-beneficiary-designations-5-big-mistakes-to-avoid.html#:~:text=Many%20people%20might%20not%20realize,the%20asset%20upon%20your%20death.
Ensure You Have Discussed the Treatment of the Family Home
The home that you and your new spouse will be residing in should also be carefully considered. Will you be staying in a home previously owned by one of you? If so, will the other spouse have any ownership interest in the home? If the owner passes first, and the home transfers to the children, will the surviving spouse be without a home now? Things such as a life estate can solve these problems while still allowing the home to transfer to the children, but they must be discussed on the front end and implemented. If the new couple is going to purchase a home together how will that purchase take place? Most of the time title to property would be taken joint with right of survivorship. That would mean that the surviving spouse would own the home free and clear. If both spouses put money into the home something as simple as how you take title to the property could effectively disinherit your children.
Understand Who the Decisions Makers Will Be
Often overlooked in the process is who will be in charge of your decision making when you are no longer able to do so. As we have discussed many times before everyone should have a Durable Power of Attorney for Financial matters and a Durable Power of Attorney for Health Care decisions. Depending upon the planning, you may also have a Trust that requires you to designate your successor trustees. In designing out these documents you will be selecting the people that will be in charge of handling your affairs. You are placing a tremendous amount of trust and responsibility in the individuals you select. You will have to consider if this should be your new spouse, one of your children or possibly a combination of people to balance out everyone’s interests. Ultimately, what is most important is what you want to happen. It is your interests as the one planning that are the most important. It is those interests that should be reflected in your documents and the plan you develop.
If you or your family are struggling with any Estate Planning or Probate concerns, make an appointment with the experienced St. Charles Estate Planning Attorneys at Jones Elder Law. That way, you can decide what happens to the assets you worked so hard to acquire. If we can help guide you, contact our St. Charles Estate Planning Law Firm at (636) 812-2575 and ask to schedule a call or virtual consultation, what we call a Vision Meeting http://joneselderlaw.com/vision-meeting/. For your safety and ours we have developed the Minimal Contact Planning process to be used while the Covid-19 virus remains a concern.
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