Second Marriages Unintentionally Disinheriting Your Children Part 2
This edition of the Koldin Law Center E-Newsletter is part of a series on Second Marriages.
In this newsletter we discuss how to use a Trust to provide for your spouse without unintentionally disinheriting your children.
All prior newsletters are saved on our website. You can read them by clicking here.
Second Marriages create very complicated Estate Planning situations. Estate Planning needs to be carefully discussed and legal documents need to be written to meet your objectives.
In the previous newsletter in this series we discussed how spouses of a second marriage often have Wills, IRAs and Joint Accounts leaving everything to each other and then to his/her own children.
The end result is that the children of the first spouse to die could be unintentionally disinherited.
Even if both spouses have Wills that leave everything to each other and then to all children of both spouses, the surviving spouse can freely change his/her Will to disinherit the deceased spouse’s children.
One way to guarantee that your own children will inherit would be to disinherit your spouse and leave everything in your Will to your own children.
The problem with spouses disinheriting each other is that this could place the surviving spouse in a financial crisis. Spouses might want to provide for each other, especially in second marriages of longer duration.
Solution: Use a Trust to Provide for Your Spouse and then to Your Children
You can leave assets in a Trust where your spouse would receive all of the income earned on trust assets, but the principal would remain in the trust.
If you wish, you can also give your Trustees the discretion to provide principal to your spouse or to pay certain expenses for your spouse.
Upon the death of your spouse, the balance would then go to your own children.
Example: John’s Will leaves everything in a Trust for Sally’s benefit and after Sally’s death, the remaining balance of the Trust goes to John’s children. Some examples of Trust terms to provide for Sally are:
(1) give Sally all income earned (interest and dividends),
(2) pay for all property taxes, insurance, and major repairs to the family home,
(3) give the Trustees discretion to use principal on other expenses for Sally’s benefit if the Trustees determine that her own funds are not sufficient.
Sally also has a Will with the same terms as John’s Will, but on her death, she leaves the remaining balance to her children.
This Example accomplishes the goals of providing for your spouse and also preserving the inheritance of your children.
It is important that John and Sally each select Trustees that they are confident will carry out their wishes.
Wills Need to Be Probated
John’s and Sally’s Wills must go through Court probate proceedings. Probate requires time and legal fees.
For a discussion of Probate proceedings, please see our website by clicking here.
Revocable and Irrevocable Living Trusts
Another option to avoid probate and to provide for your spouse and avoid your children from being unintentionally disinherited is for each spouse to establish his/her own Revocable or Irrevocable Living Trust.
Example: John establishes a Revocable Trust naming himself as Trustee. On his death, John’s children become the Successor Trustees. If his Wife, Sally, is still living, the Trust continues for the benefit of Sally. After Sally’s death, the remaining balance of the Trust goes to John’s children.
Sally also has a Revocable with the same terms as John’s Trust, but on her death, her own children become the Successor Trustees. Her Trust continues for John’s benefit and then the remaining balance after John’s death goes to her children.
This Example accomplishes the goals of providing for your spouse, preserving the inheritance of your children, and avoiding Probate.
It is important that John and Sally each select Trustees that they are confident will carry out their wishes.
A Revocable Trust does not protect your life savings from Medicaid if Nursing Home care becomes necessary.
To accomplish the same objectives described above and protect your life savings from the cost of long term care and qualify for Medicaid coverage, each spouse could establish an Irrevocable Trust.
For a discussion of Revocable and Irrevocable Trusts, please visit our website by clicking here.
The next edition of the Koldin Law Center E-Newsletter will review the use of Life Estates for the family home as an option to provide for your spouse and to make sure that your own children do not unintentionally lose their inheritance.
At the Koldin Law Center, P.C., located in East Syracuse, New York, we have over 50 years of experience helping individuals plan for immediate crisis and long term care. Our attorneys are available to discuss your estate planning options, including the advantages and disadvantages of Revocable Trusts and Irrevocable Trusts, along with other estate planning considerations including a Will, Power of Attorney, and Health Care Proxy. We do not charge a fee for the initial consultation. We welcome your children, family attorney, accountant, and/or financial planner to be present at the initial consultation.
There is something you can do.
Our Attorneys are available to speak to your organization
Our Attorneys speak to groups throughout New York State as a public service. If you would like to arrange for one of our Attorneys to speak to your group, please contact our office.</
We appreciate your referrals
We have been told by many clients who are in a crisis that they wish they had known about our firm much sooner. We are proud of the many families we have helped in times of crisis.
We are also proud of the many families we helped avoid financial crisis by doing estate planning in advance.
We all share the responsibility for making our family and friends aware of the planning options available to them.
Your referral to the Koldin Law Center could make a major difference in the lives of your family and friends if they are someday faced with a long term illness.
Remember that the Koldin Law Center offers many services for clients of all ages. Our services range from basic estate planning such as a simple will to complex estate planning including asset preservation planning.
THERE IS NO FEE FOR THE INITIAL CONSULTATION
