Remarriage and the kids' inheritance

In a remarriage or blended family situation, keeping peace in the family is an achievable goal, provided there is effective estate planning, a clear understanding of the estate plan’s objectives, and an equitable balancing of all parties’ interests.

For the purposes of the scenarios described in this article, the “parties” are John, the original husband; Linda, John’s wife; David, whom Linda married after John passed away; and, finally, the children of John and Linda.

Remarriage Scenarios

Created several years ago, John and Linda’s estate plan provided that, upon the first spouse’s death, all of his or her assets would pass to the surviving spouse.

When John passed away, his sole and separate property and his half of their community property went to Linda, just as they had planned. Also as each had planned, John and Linda’s children would inherit Linda’s property upon her death.

Then Linda met David. They fell in love and were married.

The possible scenarios going forward, and the likely consequences, are too numerous to describe here. But some of the more common situations might look like this:

• David was a wealthy man who, if Linda predeceased him, would have no need for her assets. Linda created a new estate plan but reaffirmed that, upon her death, all of her assets would go to the children from her marriage with John.

• David was a man of modest means and married Linda for purposes ranging from true love to, in the view of her children, pursuing a financial windfall. Linda was concerned that, if she pre-deceased David, he would face financial hardship. Thus, her new estate plan left a significant sum to David and the rest to her children, who resented David as a gold-digger depriving them of their rightful inheritance.

• In this doomsday scenario for Linda’s kids, the facts are similar to the immediately preceding situation. However, in this case, before her death Linda began showing early signs of dementia. Unknown to her children, David took her to a new estate planning attorney who prepared a will that left everything to David. When Linda died, David received her entire estate, and when David died, his kids got everything, effectively disinheriting Linda’s kids.

(Each of these scenarios assumes some form of estate planning; when there is no will or trust, and the parent dies intestate, the situations can become more complex. That is a topic for a future article.)

Having “the Talk”

It almost goes without saying that the prospect of losing a portion of one’s inheritance can strain the relationship between an adult child and their parent. Communicating that concern in a respectful way is generally a responsible strategy.

Once a second marriage is in the picture, you might initiate a polite conversation with your parent and ask something like, “Have you thought about your estate plan? Are you planning on making any changes?”

Phrasing your questions that way does not question your parent’s judgment or cast aspersions on their soon-to-be spouse. Rather, it can open a useful conversation that helps your parent focus on planning issues (if they haven’t already done so) and gives you a chance to express that you want to be sure that their planning reflects their intentions for their estate.

If they have no planning in place at that point, it’s also very reasonable to suggest, “You really need to go see an estate planning attorney, to at least get a will or trust and create your beneficiary designations.” That way the conversation is less about your greed than about it is about your parent having their affairs in order.

Simple Solution?

As in the case of John and Linda, most estate plans provide that, upon the death of the first spouse, that person’s share of the estate goes to the surviving spouse, without allocating (to their kids or other beneficiaries) the decedent’s share of their estate. The result: The surviving spouse owns and controls everything, including the ability to change the plan. It’s a very common scenario (one that may closely describe your plan) and it can proceed very smoothly – unless remarriage muddies the waters.

For forward-looking parents who want to protect their kids’ interests, one way we deal with that is to create a written agreement in conjunction with the couple’s estate plan. The agreement provides that, after the death of the first spouse, the surviving spouse will not change the estate plan, at least not in a way that could negatively affect the distributions to their kids.

In the document, each of their kids is named as an express third-party beneficiary of that agreement. If, after the death of the first spouse, the surviving spouse does try to change the estate plan to the kids’ detriment, the agreement gives the kids a legal claim against the surviving spouse.

We readily admit that this is not an ideal solution, as drawing up in advance the rules of legal engagement between children and their widowed parent is distasteful to many.

However, it does provide a clear plan, agreed to by the spouses when future events are still unknown, for preserving their wishes for protecting their kids’ inheritance.

More articles about Estate Planning and Marriage

It’s worth noting that, while this article is written from the perspective of protecting the kids’ interests, we see situations where it is actually the second spouse – the step-parent – who is the “innocent party.” The marriage between the surviving spouse (“Linda” in the above scenario) and the second spouse (“David”) may have been a very healthy, happy, and enduring union that was marred only by one or more kids’ resentment of the man they never wanted their mother to marry. In such cases, if a legal shield is needed, it may be to protect the interests of the second spouse from his or her step-children.