2nd Marriages Part 1 — Unintentionally Disinheriting Your Children
May 15, 2012
This edition of the Koldin Report E-Newsletter begins a series on planning considerations for second marriages.
Second marriages with separate families requires careful estate planning considerations. Without proper thought as to the consequences of different planning options, unintended and unforeseen results can occur.
Let’s begin with the most basic planning of a simple Last Will and Testament. We have had clients come to our office with simple Wills that can have disastrous consequences. Assume the following fact pattern:
John and Sally are married for the second time. John’s Will leaves everything to Sally, if living, otherwise to John’s 3 children. Sally’s Will leaves everything to John, if living, otherwise to Sally’s 2 children.
The unintended consequence occurs when the second spouse dies. If John died first, all of the couple’s life savings would now belong to Sally. When Sally dies later, her Will leaves everything to her 2 children. The result is that John’s children are completely disinherited. If Sally died first, all of the couple’s life savings would now belong to John. When John dies later, his Will leaves everything to his 3 children. The result is that Sally’s children are completely disinherited.
The unintended result of these Wills is that one side of the family is completely disinherited depending on which spouse dies first.
One option would be for each of their Wills to leave ½ to each side of the family. John’s Will could leave everything to Sally, if living, otherwise ½ to John’s 3 children and ½ to Sally’s 2 children. Sally’s Will could leave everything to John, if living, otherwise ½ to John’s 3 children and ½ to Sally’s 2 children. Now, it doesn’t matter which spouse dies first. The survivor’s Will would still leave everything to both families.
However, there is a risk with this second planning method. The surviving spouse could change his/her Will after the first spouse dies.
For example, John and Sally could each have Wills leaving everything to each other if living, otherwise ½ to John’s 3 children and ½ to Sally’s 2 children. If John dies first, Sally’s Will would have left everything to both sides of the family, but suppose Sally later changes her Will before she later dies and leaves everything to her own 2 children. Now John’s children are once again disinherited. Once John has died, he has to rely on Sally to never change her Will. Again, whichever spouse dies first risks that his/her children could ultimately be disinherited.
Another option John and Sally have is to execute simple Wills which leave everything directly to his/her own children and not leave anything to each other. This could place the surviving spouse in a financial crisis. The spouses might want to provide for each other especially in second marriages of longer duration.
There are ways that John and Sally can achieve their lifetime objectives.
The next edition of this Koldin Report E-Newsletter Series will review more sophisticated planning options using Trusts in second marriages to avoid the risks of one side of the family being disinherited while still allowing spouses to provide for each other.
The Koldin Law Center, P.C. works with families of second marriages to utilize estate planning options to meet their objectives of supporting each other and protecting each spouse’s children.