People are living longer today. Many are remarrying to fully enjoy the second half of their lives. This being said, many estate problems can occur when no estate planning is completed prior to or after the marriage.
The purpose of this article is not to give all of the solutions but to alert you to the potential unintended consequences after the death of one of the spouses of a second marriage. You may even disinherit your children without knowing that it could happen.
There are several second marriage categories:
- Each spouse has children.
- Each spouse has children and they have a natural child between them.
- One spouse has children and the other spouse has none.
- Neither spouse has children.
Each of these situations requires special planning to insure that the right beneficiaries receive the correct family property. Most couples take it for granted that their children or family will receive their property upon the death of themselves or after the death of the second spouse.
PRENUNPTIAL AGREEMENT – SEE THE LAWYER BEFORE THE MINISTER.
A prenuptial agreement can often save the children of each family a lot of grief. First of all, it is contract that has to be entered into BEFORE the marriage ceremony. Its validity depends on full disclosure. It is best that each party have an attorney to advise and verify the contents of the agreement.
It is imperative that each person disclose in detail all of their assets. If this is not done, then the survivor can possibly prove that the assets of the deceased were not disclosed and break the agreement. This is most often initiated by the children of the surviving spouse. They discover what the deceased spouse owned and that it could belong to their parent and eventually to themselves. It is important to understand that a prenuptial agreement will do nothing to protect the assets of a spouse if the other person enters a nursing home.
NO WRITTEN AGREEMENT.
Most couples had a handshake and a kiss and promised to see that the other’s children would get everything that belongs to them. They are probably telling the truth but they have no idea of the results that can occur without planning. The following is a partial list of assets that could go to someone other then where the deceased intended:
JOINT AND SURVIVORSHIP ACCOUNT, TRANSFER ON DEATH ACCOUNTS.
The titling of accounts is crucial to proper planning. These accounts will go as set forth on the signature card. Many times an account created for the convenience of the spouse or the child will be transferred automatically to the other spouse or child of the deceased. Large accounts can end in the wrong hands with the check of the box on the signature card.
It is imperative to know who is the named beneficiary. If the beneficiary designation is not updated, the wrong person may receive the funds. Life insurance is a great planning tool but if neglected, the pay out can surprise everyone.
IRA, 401K’S AND OTHER LIKE ACCOUNTS.
These accounts all have designated beneficiaries. Many individuals forget to update or make an informed decision as to who is second in line if the first designated beneficiary should predecease the owner. This type of account is also a great tool in planning but one must know who will inherit.
Improper titling of real estate can have disastrous consequences. People think their real estate is titled one way only to find out it not. Remember that a property titled as joint and survivorship will go to the survivor. Real estate passing under a will can be subject to the probate statutory rights of the new surviving spouse. The children may be forced to buy back their parent’s property or lose the family homestead forever.
A simple asset such as an automobile can go to the wrong person. A man had a 1929 Ford that was supposed to go to his son. He didn’t provide for that in writing. At his death, the surviving spouse is allowed by law two motor vehicles automatically. Of course the son of the second wife convinced her that that her husband must have wanted her to has it and she elected to take title to the antique car as provided by law. She has since passed away and the car looks great in her son’s garage. If dad had titled that car in his name, transfer on death to his son, it would be in his son’s garage today.
Detailed estate planning is imperative for a second marriage. It is also one the most difficult planning areas. The attorney’s job is to look at all of the worst case scenarios and plan accordingly. We must take the emotion out of the equation and see that each person’s assets get to the intended beneficiary. A trust is often the best tool to insure completion of the couple’s desires. Having the couple plan will prevent potential feuding among the survivors. Without proper documents, your children may not even be involved in your end of life decisions. Moving to another state can have adverse consequences in the ultimate distribution plan. There are many other potential problems that can be prevented by honest informed planning and continued thought as new assets are acquired.
Jeff Roth is a partner with David Bacon and associate Jessica Moon of the firm ROTH and BACON with offices in Port Clinton, Upper Sandusky, Marion, Ohio and Fort Myers, Florida. All members of the firm are licensed in the State of Florida. Mr. Roth’s practice is limited to wealth strategy planning and elder law in both states. Nothing in this article is intended for, nor should be relied upon as individual legal advice. The purpose of this article is to help educate the public on concepts of law as they pertain to estate and business planning. If you have any questions you would like to have answered in this area of law, please direct your question to the undersigned and your question will be considered for use as the topic of subsequent articles. Jeff Roth can be reached at email@example.com (telephone: 419-732-9994) copyright Jeffrey P. Roth 2014.