How to Avoid Disinheriting Your Children

Most people who are married for the second time do not wish to disinherit their children from a previous marriage.  However, that can happen very easily.  Here are some examples:

Tom and Sue are married for the second time and both have children from their previous marriages. They have done nothing to plan their estate and do not have wills or trusts. All their assets are in their joint names and they each have a right of survivorship: in other words, upon the death of the first spouse, the surviving spouse will receive all their assets. They discussed how they would like to distribute their estates upon the death of the second spouse and they wish that all their children from their respective first marriages receive a share of their estates. What would happen if Tom and Sue got into a traffic accident and Tom died 5 minutes after Sue? Because they do not have wills, under New York law, all their assets would go to Tom’s children: Sue’s children would receive nothing.

Larry and Veronica have children from prior marriages and have wills: his will leaves his estate to his children and her will leaves her estate to her children. All their property is in their joint names.  They visit their attorney and tell her that they wish to divide their estate equally amongst the children from both marriages. They are shocked to hear that if Larry dies first, Veronica’s children will receive all their assets and that if Veronica dies first, Larry’s children will receive all their assets.

Virginia and Robert have a second marriage, and both have children from  prior marriages. They have a loving relationship and trust each other completely. Their wills have divided their estate amongst their children in a manner they regard as fair. Their attorney suggested that they sign a postnuptial agreement, but they completely trusted each other and did not regard this as necessary. Robert died first. Virginia started to exhibit signs of dementia and her children took her to a lawyer to change her estate. The attorney had no idea of the previous estate plan. Virginia’s children received all the assets of Robert and Virginia. Robert’s children were disinherited.

John and Gloria have a second marriage, and both have children.  They set up their estate plan so that each child will receive an equal inheritance. Gloria was frugal, and John was not. Gloria predeceased John and John spent all their money on a lavish lifestyle. When he died, none of the children received anything. Is this what Gloria would have wanted?

It was the second marriage for William and Mary. Mary did not have any children, but William did. They agreed that they would leave their entire estate to William’s children. William passed away and Mary married Joseph. Joseph persuaded Mary to leave her estate to him. Mary died first, and Joseph left his estate to his children: as a result, William’s children were disinherited.

People who are in second marriages who do not wish to inadvertently disinherit children from a previous marriage must engage in the careful planning of their estates. Among other things, they need to coordinate their estates, so regardless of the order of their deaths, their children will receive the inheritance they intended to give to them. Here are some of the things to consider:

A Prenuptial or Postnuptial Agreement: a prenuptial agreement is an agreement that a couple enters into before marriage and a postnuptial agreement is an agreement that a couple enters into after marriage. Among the rights and responsibilities that these agreements determine for the couple would be how they are going to divide their estates. In the above example of Virginia and Robert, if Robert’s children had the advantage of a prenuptial or postnuptial agreement, they would have had a much stronger case with respect to the distribution of the couple’s assets.

A Trust: upon the death of the first spouse, all or some of the deceased spouse’s assets can be placed into trust. This can provide support for the surviving spouse, while at the same time providing an inheritance for the deceased spouse’s children. Some thought must be put into how this trust should be structured. For instance, is the primary goal to support the surviving spouse and if there is nothing left over for the children, is that acceptable? On the other hand, is the goal to provide the surviving spouse with some resources, but to ensure that there is something left over for the children of the first marriage? The answer to the foregoing questions will help determine how the trust is set up.

Long-Term Care: home care and nursing home care are very expensive.  Husbands and wives are legally responsible to pay for the care of the sick spouse. Long-term care expenses could completely dissipate a couple’s assets, leaving nothing for their respective children. Thus, long-term care insurance should be seriously considered to pay for such care. The couple might also consider whether Medicaid Asset Protection Trusts might be a useful tool for them.

Getting married for the second time represents an exciting new beginning for the couple. However, if one or both parties have children from a previous marriage, they will want to take steps to ensure that their children are not inadvertently disinherited.