Second Marriages Unintentionally Disinheriting Your Children Part 3
This edition of the Koldin Law Center E-Newsletteris part of a series on Second Marriages.
In this newsletter we discuss how to use a Life Estate 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 first newsletter in this series we discussed how spouses of a second marriage often have Wills, Joint Accounts, and Retirement 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.
In the previous newsletter in this series we discussed how each spouse can establish a Living Trust to provide for the surviving spouse and then leaving the remaining balance to his/her own children.
Sometimes in second marriages, one spouse owns the family home and desires to leave that home to his/her own children, but wants to allow the surviving spouse to remain in the home until he/she dies.
Example: John and Sally have been married for 10 years as a second marriage. They each have children from their first marriage. They each have their own life savings and have Wills leaving everything to their own children. John owns the family home from before they were married. John wants his children to inherit the home, but he wants Sally to be able to live in the home for the rest of her life.
Option 1: Deed a Life Use to Sally
John could sign a deed granting a Life use to Sally.
When John dies, his children would inherit his life savings through his Will, including the family home, but Sally would have the right to remain in the home for the rest of her life.
There are some risks with John signing a Deed to give Sally an immediate life use:
1. If John and Sally were to divorce, Sally would still own her life use and could refuse to leave the home.
2. If John and Sally were to divorce and Sally agreed to sell the house, Sally would be entitled to a portion of the proceeds from the sale based on the value of her life use.
3. If John wanted to sell the property, Sally could refuse to sell because she owns a life use.
4. After John’s death, Sally could fail to maintain the home in good condition and this could reduce the value of the home for the children after Sally dies.
Option 2: John’s Will Could Leave Sally a Life Use
John’s Will could leave Sally a life use to the home and everything else to his children.
Since John can freely change his Will and since Sally does not have any legal ownership in the house until after John dies, John can sell the house at any time without Sally’s consent.
Sally would not be entitled to any of the proceeds of sale of the house.
John’s Will could also spell out Sally’s obligation to maintain the house in good condition or her life use would terminate.
The main disadvantage of providing a life use through the Will is that it would require Probate Court proceedings which is time consuming and expensive.
Option 3: John Could Establish a Living Trust which Leaves Sally a Life Use
As discussed in the previous newsletter, a Living Revocable or Irrevocable Trust avoids Probate. The Trust can leave Sally a life use on John’s death with the remaining balance going to John’s children.
John’s Trust could also spell out Sally’s obligation to maintain the house in good condition or her life use would terminate.
For a discussion of Revocable and Irrevocable Trusts, please visit our website by clicking here.
For a discussion of Life Estates, please visit our website by clicking here.
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.
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