During my many years in estate planning, I’ve recognized that second marriages can sometimes make estate planning more complex. This is all the more reason to work with an estate planning attorney with considerable experience in this area. It’s easy to overlook or forget critical factors. The following article, written by Jim Flynn for the Denver Gazette, does an excellent job of reviewing some potential pitfalls. I advise you to read on if you are in a second marriage.
“Estate planning can be challenging for anyone at any time. However, estate planning for people in a second marriage can present issues not found in a first marriage.
That’s in large part because a second marriage will often bring children (and pets) from a prior marriage into a blended family and this can lead to a situation where, for estate planning purposes, treating the children of both spouses equally could be problematic and not the way to go.
For example, one of the children coming along as part of a second marriage might have special medical needs or might already be the beneficiary of a generous irrevocable life insurance policy — or might have just signed a multimillion dollar contract to pitch for the Los Angeles Dodgers.
Also, one of the spouses in a second marriage might have ample sources of wealth already in place and have no need for an at-death transfer of wealth from the estate of a new spouse. And, one spouse in a second marriage might bring to the marriage debts the other spouse doesn’t want to have to pay.
There are many variations on these themes and, in the course of doing estate planning following a second marriage, issues of this kind need to be identified, thoughtfully discussed, and dealt with in a manner requiring a dialogue among the spouses and their estate planning professionals, and possibly their children. Otherwise, bad things can happen, including impaired relationships among children coming together as part of a blended family. (“Dad, I’m not keen on sharing my inheritance with your new wife’s kids, and I don’t like her cat.”)
As an example of the complications that can arise, the Colorado Supreme Court had to deal with a case back in 2016 wherein two of the children in a blended family, when their father died, received a much smaller inheritance from their father than the surviving wife’s children, even though the father’s intention was that his and his second wife’s children be treated equally. This happened because the father had put valuable assets of his into joint tenancy ownership with his second wife, giving her a right of survivorship. So, when the father died, his second wife became the owner of these assets and she promptly amended her will to leave the assets to her children, with nothing to the father’s children.
In this case, the decedent’s children sued the lawyers who did their father’s estate planning, claiming the lawyers failed to do what needed to be done to honor their father’s wishes about equal treatment of the children. The lawsuit was unsuccessful, with the Supreme Court ruling that the father’s lawyers owed no duty to his children, the plaintiffs in the case. Therefore, the wife didn’t have to share her deceased husband’s wealth with his children. She could leave it all to her children.
Once the issues generated by a second marriage have been identified and objectives determined, there are numerous tools in an estate planning lawyer’s toolbox to address the issues. Included here are the use of trusts; non-probate transfers (like pay-on-death instructions for a bank or brokerage account); life estates (after I die, my wife can continue to live in my house for her lifetime but then the house goes to my kids); and a gifting program, where wealth is transferred to children before a parent’s death. (Children tend to like this tool best.)
Second marriage estate planning can also generate attorney-client ethical issues, including making sure it’s clear to everyone involved who an attorney is, and is not, representing and with whom information acquired during the course of the attorney’s representation can be shared. Although two lawyers tend to be more expensive than one, these ethical issues can lead to the conclusion that it’s best for each spouse to have separate legal representation.”
I think it would be a safe bet that as you read this article, you immediately thought of similar, unpleasant situations friends or family members have experienced because the estate plans were unclear or not set up correctly. It can happen. To ensure your estate plan meets your needs, you should work with an experienced estate planning attorney, ideally one with considerable experience working with second-marriage clients, AND communicate openly and honestly with that individual precisely what you want. I’d be happy to work with you to ensure your estate plan is as uniquely yours as possible. Call me at 513-399-7526 or visit my website, www.davidlefton.com.
Source: Denver Gazette, 1/7/24 by Jim Flynn