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Protecting the Inheritance for Children
When talking to clients about preparing an estate plan, one issue that often comes up is how to protect the family assets from a new spouse if one dies and the survivor remarries. People often don’t think about this problem until it is too late. Normally, a couple’s documents clearly state that when the second of them dies, the assets go to the children. Paraphrasing in legalese, it may read something such as, “If I die and my spouse survives me, then everything of mine shall pass to my spouse. But if my spouse predeceases me, then everything of mine shall pass to my children.”
But what if it happens after the first of the couple dies and the survivor later remarries? Is the existing will executed before the remarriage in effect to pass assets to the children at death?
Yes, it is. Can the survivor change the will, invalidating the earlier one, to pass assets to the new spouse and take assets away from the children? Yes, that can also happen. Unless steps are taken in the planning process, there is nothing to stop the survivor from doing a new will and passing assets, possibly everything, to a new spouse and even his/her children from a prior marriage.
For instance, say Wife dies and the surviving Husband remarries. Husband revises his will to pass some or all of his assets to New Wife, taking assets away from the children. When Husband later dies, this New Wife will control the assets.
The follow-up question is usually about the will of the first to die. Using the above example, the question goes something like this, “But the deceased Wife’s will says to give everything to the children when Husband dies…How can Husband change that?” The answer is, because he can.
If Wife dies first and her will simply gives everything to Husband, those assets are now his assets. As such, his will controls how the assets pass at his death. Wife’s will is no longer relevant.
Can proper estate planning protect the family assets so the new spouse cannot take anything away from the children? Again, the answer is yes. I will discuss how to protect the family wealth in upcoming blogs.
One last item to pull together concepts from a previous blog posting. In the first blog posting, I discussed how property passes when someone dies. You may recall that one of the ways is by right of survivorship, with a married couple (referred to as “Tenants by the Entireties”). When assets are titled in both the couple’s names and one dies, the survivor is now the sole owner of all the couple’s assets. You now have the same problem as described above – the survivor of the couple has total ownership of the family assets and is free to give them at his/her death to whomever he/she desires, including a new spouse. The point of this is that this danger can happen both when assets pass to a surviving spouse by either a will or by right of survivorship.
If you have any questions or comments about this topic, please do not hesitate to contact the estate planning lawyers at Martin Heller Potempa & Sheppard, PLLC.
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