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Thursday, September 9, 2010

If my spouse remarries after my death, will my kids inherit from me?

Much of the time, the Wills made by husbands and wives are mirrors of each other, in the sense that the spouses leave everything to each other, then follow the same distribution for when both of them are gone. The most common plan for when both parents have passed on is to leave most or all of the estate to their children.

Sometimes a spouse in this situation is shocked or dismayed to learn that should he or she pass away, there is absolutely nothing stopping the surviving spouse from re-marrying and leaving everything to the new spouse. The concern is that the new spouse will not be as interested in the children of the original couple, and the children will never inherit the money.

I can see why this thought bothers people. Nobody wants to work and save and invest for years, thinking that the efforts will benefit his/her spouse and kids, just to find out that some other person - and perhaps a completely different set of children - will reap the benefit instead.

Spouses need to understand that when they make mirror Wills as I've described here, the spouse can legally change his or her own Will if he/she wants to. There is a different Wills arrangement that does legally bind the spouses not to change the Wills if widowed; those Wills are known as mutual Wills. Unfortunately the information available is confusing because many advisors and journalists erroneously refer to mirror Wills as mutual Wills. A mutual Will contains a clause that specifically says that neither the husband nor the wife will change the Will should he or she become widowed. It creates a legal obligation on both of them not to change the Wills. Your Will won't have that clause unless you specifically direct your lawyer to include it.

Mutual Wills are rare compared to mirror Wills. I rarely prepare mutual Wills for clients because I feel that doing so doesn't allow for unforeseen but reasonable events in the future. They fit clients in certain circumstances, of course, but are not widely applicable.

There are some other ideas that could be integrated into your estate plan if you are concerned about your spouse re-marrying and not leaving the estate to the children. While many spouses say that they can't even imagine that happening, they need to realize that while it's unimaginable right now while the spouse is alive and they are a family unit, things would be very different without the spouse alive.

One idea is to leave some of all of the estate in a spousal trust that would hold the estate for the lifetime of the surviving spouse. A trust like this would allow for money for the spouse to live on, while protecting the capital intact. On the death of the surviving spouse, the capital would be divided among the children. If you want to explore using trusts, make sure you understand the tax consequences.

Another idea is to leave part of your estate directly to your children, and part to your spouse. If your children are underage, their shares would be held in trust for them until the age you specifiy for inheritance. This would mean that only part of your estate is at risk to be transferred to anyone who married your spouse in the future.

A further idea is to transfer assets to your children while you are alive. This of course depends on whether you need those assets yourself, but it is an idea that is workable for some families.

If you own a business that you want to pass to your children one day, make sure you begin your succession planning process early on to get some plans into place.

I always encourage people to be very open with me about their concerns, their fears and their goals when we are talking about estate planning. Usually there are ways of addressing your concerns, but only if you tell your lawyer what those concerns are.

11 comments:

  1. My Father in law is about to remarry. My Mother in law passed away 2yrs ago and my husband is an only child. When mom passed we were told that on the event of dad's passing my husband would be the executor and after the estate was settled, receive everything that is left. Now that he is remarrying, where does my husband stand with dad's intended? She has 5 grown children with spouses and grandchildren. He recently sold his home (my husbands childhood home) and they have purchased another home an hour away to be closer to her family. Her husband passed 7yrs ago and financially is not set up in the same manner as dad. He has many investments which are substantial. Now after having the wedding sprung on us in less than a month my husband is worried she and her family will get everything his parents worked hard for in their businesses throughout their 56yr marriage.

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  2. When your father in law marries, the will he has in place will be revoked. There is nothing stopping him from making a new will in which he leaves everything to his new wife. This is a really tricky situation for you and your husband, as I know it's tough to bring up subjects like money without sounding greedy. Has your husband asked whether there is to be a prenuptial agreement? An agreement would protect your father in law, but also following generations such as your husband and your children. Who does your father in law have named as the beneficiary of his registered investments? If your later mother in law left a will, no doubt it left everything to her husband, and if he had passed already, then to her son (your husband). Could your husband use the general plan of his late mother's will as a way of bringing up the topic of whether your father in law intends to change everything to leave it to his new wife? I think you should give your father in law the benefit of the doubt until you hear from him that he intends to cut out your husband from his will.

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  3. My father remarried after my mother's death. He had 3 children, and his new wife had 2. My father and new wife wrote a prenup that states that in the event of his/her death, everything that he/she had before marriage is to go to their first marriage children. Everything else is to go to the surviving spouse (including the interest and increase in value on their individual assets) and at the second person's death is to go to all 5 of their children equally. They went on to write "mirror image" wills that point to the assets in the prenup and restates their intentions. One month after my father died, my stepmother wrote a new will. She states that all of her "estate" is to be divided 5 ways...sounding much like the agreement that she made with my father. However, she has gone to the bank and put her children down as beneficiaries on the vast majority of the assets they had...at values well above the prenup agreement. She has also told me that she intends to give her children extra money before and after she dies. I am the executor of my father's estate. I have asked her to put our portion of the inheritance in a trust and she has refused. If I take her to court, what the chances that a judge would force a trust? Or, make this right in some way?

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    1. In my opinion, you would have zero chance of success. I assume that on your father's death, his will was followed and all of his pre-marriage assets went to his children, with the remainder going to his wife. If not, it's up to you as his executor to carry that out.

      Once his wife inherited these assets, they are hers to do with as she wishes because according to what you have said, there was no trust created in the will.

      Obviously I haven't read your father's will, but in answering your question I'm drawing on many thousands of wills that I've seen, written, and/or litigated. I believe that if you read your father's will carefully, you will see that it says IF SHE SURVIVES him, his kids get his pre-nup assets and she gets the rest, but IF SHE DOES NOT SURVIVE him, then the estate is split five ways. She survived him, so the second part of that just never comes into play.

      Now, if you and your siblings have received your father's pre-marriage assets, there is no reason why you would have a claim to the part of the estate that went to her.

      As I said, I haven't seen the will, so if this doesn't sound right to you, I encourage you to have the will interpreted by an experienced wills lawyer for a second opinion.

      Lynne

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    2. You are correct in the wording of my father and stepmom's mirror image wills. However, the prenup, which is refered to in the wills state " In the event of the death of one of the parties signing this agreement, the property acquired after the marriage shall be left to the surviving party for their life and the remainder shall be equally divided among the 5 children of the parties namely:...." We are still awaiting probate court. SO, no agreements have been made despite my attempts. I really feel as though the prenup is a contract... a legally binding contract. My father did not intend for her to rewrite her will a month after he passed and pass his life's savings on to her kids only. Is there a route I could take to secure my inheritance...knowing the bulk of it is in her hands currently. One of my brothers has hired a litigation attorney hoping to force my stepmom into a trust or into a settlement. It is his belief that the bulk of our inheritance is in the money that my father left for my stepmom to live on and he wants her to follow through with her agreement that she made with my father. My father worked for 36 years prior to their marriage...he tried to take legal precautions to protect his children. My fear is that she is going to disinherit my father's children...she has already started the process. She is 82 years old...never worked a day in her life...only earning her first husband's retirement $ and social security. My father provided 87% of the income that came into that blended family. She even has possession of my mother's property and grandparent's on my mother's side, their heirlooms. She refuses to give us our family heirlooms and will not even allow my brother and myself to get things that were in the home that were ours. Surely there is a legal way to make this right!

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    3. My questions are these...in the above scenario, does the "intention" of the prenup and mirror image wills mean nothing? Can this stepmom walk away from the agreement to divide all the $ (outside of the premarital $) 5 ways as she agreed to and signed in the prenup? And, is there any case studies or rulings that would support in a court of law to show that the money this stepmom receives is in fact part of the legal agreement she made in the prenup? In my mind, a "trust" is implied...

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    4. If any intention exists for mirror wills, it is not what you think it is. In law, people who insist that their spouse cannot change the will after death have the option to sign mutual wills. Mutual wills contain binding contractual agreement not to change the wills. Therefore, a person who doesn't sign one of those, but merely signs a mirror will, may be thought to intend NOT to control what his or her spouse does later. There is definitely no trust implied by mirror wills. You're reading into it things that don't exist in law, but that make sense to you emotionally. Unfortunately, law and emotion don't mix very well.

      As for a pre-nup, that might help, but the specific wording is really important. You just can't say that the intention of a document is something other than what the words actually say.

      As hard and bitter a pill as it is to swallow, we are stuck with the documents our parents signed, even if we don't agree with them.

      Lynne

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  4. My brother has currently pulled the case out of probate and into circuit court. We are awaiting court. You are right that I see things through emotional eyes. But, my father didn't just write these things down on toilet paper. He did, in fact, go to an attorney and signed a prenup that included their "intentions" on how their assets were to be distributed even after death...after the death of the first person and of the second of the two. My stepmom entered into a contract with my father, in my view, that did not end simply because he died first. I know that my father did not intend for her to break that agreement, rewrite her will, and give everything left to her kids alone. I just don't get it! :( I am having a hard time understanding why one should even enter into a prenuptial agreement that specifically talks about how things are to be handled after each of their deaths, if once one person is dead, the other can toss the prenup in the trash. The law is flawed! Their prenup outlines exactly what they each had before the marriage and then states that EVERYTHING (including the interest) outside of what each had before marriage is to be divided 5 ways (btw his kids and hers) at the second ones death. Any chance that the judge would do some sort of settlement? Something to free us from her? I promise that my father did not intend for things to go this way...he expected her to honor that agreement...or, that the law would force her to.

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  5. Hey Lynne,
    I thought you'd be interested to know how the above case ended. After my brother requested to pull the case into circuit court, we held a mediation. In this mediation, we learned that my step mother had already placed huge chucks of my father's money into CDs and placed her 2 daughters as their beneficiaries...thus, clearly intending to disregard the agreement (prenup) she made with my father. We could only get her to agree to put a small portion of our inheritance in a trust. So...WE SETTLED! She agreed to pay us 60% of what should have been our inheritance NOW...in exchange, she will cut us completely out of her will and leave the remainder to her children...and we waived our rights to it. Basically, we let her win. Fearing that the court would not force her hand, we settled...thinking that a bird in the hand is worth two in the bush! We had no guarantee that she would have left us anything...especially after dragging her through litigation. I wish things had gone differently, but, I am happy that I am finally free! The bond that my father had with her no longer is strapped around my neck. I hope that other people out there struggling through these blended family issues can learn from this situation!

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    1. Thanks very much for the update! I can just about see you skipping, you sound so relieved that the dispute is over :)

      Interesting that you used mediation. I'm a huge fan of mediation of estate disputes. It's faster and cheaper than going to court, and as you said, a bird in the hand IS worth two in the bush. Good for you.

      Lynne

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  6. My father passed away 5 years ago without a will so the state made a will for him giving my mother 50% my brother 25% and myself 25% of all belongings and wrongful death law suit that was ongoing, my mother received everything and over $130,000 for the wrongful death plus all the money she kept fTom selling his belongings which valued in the will at 40k so my mother then filed executive of the will and agreed that she would make sure all belongings and money was given properly...well my brother and I received NOTHING AT ALL! So she didn't give any portion of the money she received or any items ..nothing now she is re-marrying so now on the land and home the state added myself and my brother as 25% each owners ..now when she gets married what will happen to my father's house or the stuff my brother and I never received??

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