2nd marriages and estate planning

mathjak107 · 09-22-2006, 04:06 PM

Having gotten married for the 2nd time last year both my wife and i have grown children from our first marriages.* Both of us had gotten screwed when our parents remarried and after their spouses inheirited everything they eventually re-wrote their wills leaving us out. Pretty ironic it happened to both of us.

So we gave lots of thought and didnt want to use restrictive trusts or to upset the living style of the surviving spouse by pulling the rug out from under each other and giving huge chunks or all to our respective kids.

We discussed it with our attorney and basically every thing legal binding was something we didnt want to do. so heres what we did and id love to hear how others resolved it.

We decided if we get married we will fully support each other thru life,meaning we will not give our shares away to our kids while one of us is alive leaving the remaining spouse to struggle thru an established lifestyle .

We than attached a note that was notarized that we each intend to be ethical and forth right and promise never to dis-inheirt each others children to our wills.** We also gave a sealed copy of it to each child. *Is it legal and binding?* nope! Its strictley a moral thing as a will is a will and over rides all.* But non the less we did vow to each other to do the right thing which is more than our parents did. We know each other well and both of us believe even if the other re-married if one of us passed away we would always do the right thing for each others kids.

We did agree that my kids will own my current life insurance policy and hers will get her share of any un-sold real estate in an inheirited business my wife and her son are partners in from my wifes deceased husband so they will get that at the death of either onE of us upfront before the remaining spouse passes away..

Brat · 09-22-2006, 05:22 PM

One thing to consider is to purchase a first to die insurance policy payable to the issue of the person who dies and deductible from the estate of heirs of the survivor.* Something along that line.* That way if the survivor changes their will the offspring of #1 will have been provided for.

In a simple situation where the home comprises the estate, purchase a policy approximating the value of the home payable to the kids of the person who dies, then leave the house to the survivor.

mathjak107 · 09-22-2006, 05:25 PM

I know nothing about these policies but i bet a million dollars worth of insurance would be brutaly expensive. Anyone ever utilize one these in their plan?

SteveR · 09-22-2006, 05:37 PM

Welcome to the club! *We are both in our third marriage so financial complications came with the marriage license. *

We chose to do it all legally. *More from the standpoint of keeping our respective kids or future spouses from upsetting our respective apple carts. *We each have a Living Trust, Health Care POA, Wills, etc. *We have planned first and foremost for the continued support of the other upon our respective deaths. *We have a reasonable amount of cash going to my kids upon my death but the bulk of my estate will be in a Family Trust and a Marriage trust for the support of my wife. *She has a similar framework in her trusts. *Upon the death of the second to die, our respective estates will be divided as specified in our trusts. *Should one of us remarry after the death of the other, the trusts do not allow any changes to the inheritance structure; no one can be disinherited. *

We will revisit this every 5 years to see if any changes are needed. *We both feel better having it all spelled out and we have shared this information with our kids so they know what to expect and what not to expect when one of us dies. *

Our goal is to take care of each other; if there is anything left in the bank when we are both dead then our kids and their kids will get to divide it; not before. *We both started with nothing and believe our kids will best be served by making their own way in the world. *

We each have to do what works best for us and what we want for our spouses (SOs) and our families. *Do what works for you but be aware that people and circumstances can change over time and especially after the death of a spouse. *The laws are there for a reason and they can speak for you after your death when you cannot. *

mathjak107 · 09-22-2006, 05:42 PM

Not having all that much in substantial assets both of us would need the full amount to carry us thru living the lifestyle we would want to carry on without the other with out giving anyaway yet.

That creats the delima for the surviving spouse and looking out for our kids. Perhaps down the road we will be able to sell some investment properties off that are now governed by new york city rent control laws and we will have enough in assets to give some away upon the death of 1 of us.

**Martha** · 09-23-2006, 10:18 AM

Even if you are not in the position to give outright to your kids on the death of one of you, it still could make sense for each of you to have a trust with the kids as ultimate beneficiaries. The surviving spouse would have the income from the trust, as well as his/her own assets to live on.

mathjak107 · 09-23-2006, 10:24 AM

We both have a problem with forcing the other spouse to live on the income generated by the other spouses assets only ,with great difficulty spending principal if needed. . Dont forget when 2 sets of kids are involved the surving spouse is accountable to someone elses children for every expenditure beyond the income that may have to come out of their parents trust. It can be a real horror for the surviving spouse. The only time i envision us doing this is when and if we have substanialy more assets so having to hit principal isnt as great a factor.

Nords · 09-23-2006, 11:17 AM

Quote:

Originally Posted by Martha

The surviving spouse would have the income from the trust, as well as his/her own assets to live on.

Quote:

Originally Posted by mathjak107

We both have a problem with forcing the other spouse to live on the income generated by the other spouses assets only ,with great difficulty spending principal if needed.

The trusts Martha is referring to commonly include provisions for the spouse to dip into the principal as deemed necessary. Unless one of the kids has been named trustee, it's not considered any of their business.

**Martha** · 09-23-2006, 11:25 AM

Quote:

Originally Posted by Nords

The trusts Martha is referring to commonly include provisions for the spouse to dip into the principal as deemed necessary.* Unless one of the kids has been named trustee, it's not considered any of their business.

Yes, you can draft the trust the way you want to. If you want principal to go to your spouse you can do that and place limitations on it that you want.

mathjak107 · 09-23-2006, 11:39 AM

Im not so sure about the kids not having to get an accounting of the trust each year if they are benieficiary ,especially when one of the spouses is gone and starts to take distributions.
I know my wife got a yearly accounting from the one she was beneficiary on. Im not sure if it is a courtesy or required under state law.

mathjak107 · 09-23-2006, 11:48 AM

I would imagine if the kids were not the trustee that the acting trustee would approach the beneficiaries with any expendature going outside the guide lines of the trust for approval anyway. They wouldnt want to get caught in a law suite for allowing the syphoning of funds .

mathjak107 · 09-23-2006, 02:04 PM

Thinking some more about it something like a marital trust allowing up to 5% withdrawls of income and 5% of principal may be very workable.

All though we trust each other 110% to do the right thing for our children the fact is we can each re-marry at some point after a spouse is deceased and if things arent structured properly your spouse dies first,their new husband inheirits everything and our kids are out. I think thats our big fear .

rs0460a · 09-23-2006, 03:19 PM

Quote:

Originally Posted by mathjak107

Both of us had gotten screwed when our parents remarried and after their spouses inheirited everything they eventually re-wrote their wills leaving us out. Pretty ironic...

Not really "ironic".* Same thing happened to me, with my parents divorce.* Of course, since I never planned to get anything from them, they did "meet my expectations".

I didn't worry about "who got what".* I made my own financial plan, and have been more than satisfied with the results.* Not "getting something" included not having "bad feelings".* I chose to let the "anger" go, since it was not part of my plan...

- Ron

uncledrz · 09-23-2006, 05:04 PM

I'd go with a trust, drafted by an attorney in your State, which allows all income to go to surviving spouse, and, if necessary for basic support, health, welfare, etc. (but not transfer by inheritance, etc) invasion of a certain amount of principal each year.
The plan you have now will work, assuming good faith, most of the time, but when it doesn't --------very expensive and lenghtly court battle which could be avoid by some planning at this time.

SteveR · 09-25-2006, 02:53 PM

I am the trustee for my late wife's trust.* I do NOT report anything to the secondary beneficiaries.* I don't have to since I am the trustee.* I am able to use the assets from this trust as needed for my welfare without reporting this to anyone.* Beneficiaries do not have a say in the trust until the assets are legally transfered to them by the trustee according to the provisions of the trust.* Once a person dies their trust is irrevocable(sp?) so what is in the trust at death stays within the trust (with some expections).

The trust is designed to protect the living expenses of the surviving spouse...not any of the kids unless you write it otherwise.* It is a personal matter but in may case my spouse comes before my kids since they are able to earn a living on their own and I know they will be taken care of once my spouse and I are both gone.

edited to add:

Its your money and your kids did not earn it so why do you think they have a say in how it is used by the surviving spouse? You may choose to leave them whatever is left after you both die but beyond a small chunk of cash, I don't plan on passing much on to my kids after I am gone. This has been discussed with all the kids and they understand that we come first...they come after we are taken care of.

rs0460a · 09-25-2006, 03:13 PM

Quote:

Originally Posted by SteveR

Its your money and your kids did not earn it so why do you think they have a say in how it is used by the surviving spouse?*

While my father was "running around" with the current "surviving spouse" (for 10 years),* it caused a lot of heartache for me (and my wife, since we were married at the time of my parent's divorce).* However, knowing that my parents should have been divorced well before they did (they both had their faults), I have no argument with "the second wife".* Like I stated before - I didn't count on anything from my (either) parents.* I was not disappointed with the results.

Sometimes you have to accept that life is not perfect, but you can go on...

- Ron

SteveR · 09-25-2006, 03:31 PM

Quote:

Originally Posted by Ron'Da

While my father was "running around" with the current "surviving spouse" (for 10 years),* it caused a lot of heartache for me (and my wife, since we were married at the time of my parent's divorce).* However, knowing that my parents should have been divorced well before they did (they both had their faults), I have no argument with "the second wife".* Like I stated before - I didn't count on anything from my (either) parents.* I was not disappointed with the results.

Sometimes you have to accept that life is not perfect, but you can go on...

- Ron

No argument with your comments. I know more than a few widow(ers) who had similar "issues" after remarriage. It is an unknown and I guess a Pre Nup would be good advice. When I remarried, we did discuss a prenup but my faith in making the right choice and the quality of person I was to marry convinced be otherwise. Still, we do have individual trusts and our respective kids will get a decent amont of cash at either of our deaths just to give them some $$$ in case we outlive our kids or our funds.

Mr._johngalt · 09-25-2006, 06:25 PM

Quote:

Originally Posted by SteveR

No argument with your comments.* I know more than a few widow(ers) who had similar "issues" after remarriage.* It is an unknown and I guess a Pre Nup would be good advice.* When I remarried, we did discuss a prenup but my faith in making the right choice and the quality of person I was to marry convinced be otherwise.* Still, we do have individual trusts and our respective kids will get a decent amont of cash at either of our deaths just to give them some $$$ in case we outlive our kids or our funds.

Sorry...........I gotta say it. When it comes to 2nd, 3rd, 4th etc
marriages; prenup, prenup, prenup. It may not be romantic
but you will never regret it. Voice of experience.

JG

mathjak107 · 09-26-2006, 03:31 AM

Prenups can be pretty worthless in court. Although they look good on paper the reality is that once they go to court all bets are off. They remind me of reading resumes. I never met a resume i didnt like.* * *

From what ive learned about them they are based on the fact that they only are upheld if situations havent changed.* In other words you get married ,you have a career ,she has a career, you sign prenups. She becomes ill and unable to work ,or you have a child with problems that requred full time attention ,or an accident left her unable to work.
The courts look at each situation to determine whether the prenup should still stand or whether the spouse has a new implied situation different from the situation when the prenup was agreed to. . We learned all this after my new bride and i looked into a prenup of a sort just in case of divorce and after meeting with a few professionals they all said the same thing.

They all said they can write one for us but they may not be worth the paper they are written on.* One even refused saying here in new york he wont do pre-nups as he is tired of getting dragged into court himself for documents he wrote that were being challenged.

09-22-2006, 05:22 PM	#2
Brat Thinks s/he gets paid by the post Join Date: Feb 2004 Posts: 2,834	Re: 2nd marriages and estate planning One thing to consider is to purchase a first to die insurance policy payable to the issue of the person who dies and deductible from the estate of heirs of the survivor.* Something along that line.* That way if the survivor changes their will the offspring of #1 will have been provided for. In a simple situation where the home comprises the estate, purchase a policy approximating the value of the home payable to the kids of the person who dies, then leave the house to the survivor. __________________ Duck bjorn.

09-22-2006, 05:25 PM	#3
mathjak107 Thinks s/he gets paid by the post Join Date: Jul 2005 Posts: 2,430	Re: 2nd marriages and estate planning I know nothing about these policies but i bet a million dollars worth of insurance would be brutaly expensive. Anyone ever utilize one these in their plan?

09-22-2006, 05:37 PM	#4
SteveR Moderator Emeritus Join Date: Jul 2005 Posts: 2,675	Re: 2nd marriages and estate planning Welcome to the club! We are both in our third marriage so financial complications came with the marriage license. We chose to do it all legally. More from the standpoint of keeping our respective kids or future spouses from upsetting our respective apple carts. We each have a Living Trust, Health Care POA, Wills, etc. We have planned first and foremost for the continued support of the other upon our respective deaths. We have a reasonable amount of cash going to my kids upon my death but the bulk of my estate will be in a Family Trust and a Marriage trust for the support of my wife. She has a similar framework in her trusts. Upon the death of the second to die, our respective estates will be divided as specified in our trusts. Should one of us remarry after the death of the other, the trusts do not allow any changes to the inheritance structure; no one can be disinherited. We will revisit this every 5 years to see if any changes are needed. We both feel better having it all spelled out and we have shared this information with our kids so they know what to expect and what not to expect when one of us dies. Our goal is to take care of each other; if there is anything left in the bank when we are both dead then our kids and their kids will get to divide it; not before. We both started with nothing and believe our kids will best be served by making their own way in the world. We each have to do what works best for us and what we want for our spouses (SOs) and our families. Do what works for you but be aware that people and circumstances can change over time and especially after the death of a spouse. The laws are there for a reason and they can speak for you after your death when you cannot. * __________________ Work? I don't have time to work....I'm retired.

09-22-2006, 05:42 PM	#5
mathjak107 Thinks s/he gets paid by the post Join Date: Jul 2005 Posts: 2,430	Re: 2nd marriages and estate planning Not having all that much in substantial assets both of us would need the full amount to carry us thru living the lifestyle we would want to carry on without the other with out giving anyaway yet. That creats the delima for the surviving spouse and looking out for our kids. Perhaps down the road we will be able to sell some investment properties off that are now governed by new york city rent control laws and we will have enough in assets to give some away upon the death of 1 of us.

09-23-2006, 10:18 AM	#6
Martha Administrator Join Date: Feb 2004 Location: minnesota Posts: 9,857	Re: 2nd marriages and estate planning Even if you are not in the position to give outright to your kids on the death of one of you, it still could make sense for each of you to have a trust with the kids as ultimate beneficiaries. The surviving spouse would have the income from the trust, as well as his/her own assets to live on. __________________ . Do not rely on the information provided--my posts are not to be taken as legal advice. Needless to say you must consult with your legal representative. I am not responsible for errors. If I offended you with cya I apologize. If I did not, I tried.

09-22-2006, 04:06 PM	#1
mathjak107 Thinks s/he gets paid by the post Join Date: Jul 2005 Posts: 2,430	2nd marriages and estate planning Having gotten married for the 2nd time last year both my wife and i have grown children from our first marriages.* Both of us had gotten screwed when our parents remarried and after their spouses inheirited everything they eventually re-wrote their wills leaving us out. Pretty ironic it happened to both of us. So we gave lots of thought and didnt want to use restrictive trusts or to upset the living style of the surviving spouse by pulling the rug out from under each other and giving huge chunks or all to our respective kids. We discussed it with our attorney and basically every thing legal binding was something we didnt want to do. so heres what we did and id love to hear how others resolved it. We decided if we get married we will fully support each other thru life,meaning we will not give our shares away to our kids while one of us is alive leaving the remaining spouse to struggle thru an established lifestyle . We than attached a note that was notarized that we each intend to be ethical and forth right and promise never to dis-inheirt each others children to our wills.** We also gave a sealed copy of it to each child. Is it legal and binding? nope! Its strictley a moral thing as a will is a will and over rides all.* But non the less we did vow to each other to do the right thing which is more than our parents did. We know each other well and both of us believe even if the other re-married if one of us passed away we would always do the right thing for each others kids. We did agree that my kids will own my current life insurance policy and hers will get her share of any un-sold real estate in an inheirited business my wife and her son are partners in from my wifes deceased husband so they will get that at the death of either onE of us upfront before the remaining spouse passes away..

09-23-2006, 10:24 AM	#7
mathjak107 Thinks s/he gets paid by the post Join Date: Jul 2005 Posts: 2,430	Re: 2nd marriages and estate planning We both have a problem with forcing the other spouse to live on the income generated by the other spouses assets only ,with great difficulty spending principal if needed. . Dont forget when 2 sets of kids are involved the surving spouse is accountable to someone elses children for every expenditure beyond the income that may have to come out of their parents trust. It can be a real horror for the surviving spouse. The only time i envision us doing this is when and if we have substanialy more assets so having to hit principal isnt as great a factor.

09-23-2006, 11:39 AM	#10
mathjak107 Thinks s/he gets paid by the post Join Date: Jul 2005 Posts: 2,430	Re: 2nd marriages and estate planning Im not so sure about the kids not having to get an accounting of the trust each year if they are benieficiary ,especially when one of the spouses is gone and starts to take distributions. I know my wife got a yearly accounting from the one she was beneficiary on. Im not sure if it is a courtesy or required under state law.

09-23-2006, 11:48 AM	#11
mathjak107 Thinks s/he gets paid by the post Join Date: Jul 2005 Posts: 2,430	Re: 2nd marriages and estate planning I would imagine if the kids were not the trustee that the acting trustee would approach the beneficiaries with any expendature going outside the guide lines of the trust for approval anyway. They wouldnt want to get caught in a law suite for allowing the syphoning of funds .

09-23-2006, 02:04 PM	#12
mathjak107 Thinks s/he gets paid by the post Join Date: Jul 2005 Posts: 2,430	Re: 2nd marriages and estate planning Thinking some more about it something like a marital trust allowing up to 5% withdrawls of income and 5% of principal may be very workable. All though we trust each other 110% to do the right thing for our children the fact is we can each re-marry at some point after a spouse is deceased and if things arent structured properly your spouse dies first,their new husband inheirits everything and our kids are out. I think thats our big fear .

09-23-2006, 05:04 PM	#14
uncledrz Full time employment: Posting here. Join Date: Mar 2005 Posts: 548	Re: 2nd marriages and estate planning I'd go with a trust, drafted by an attorney in your State, which allows all income to go to surviving spouse, and, if necessary for basic support, health, welfare, etc. (but not transfer by inheritance, etc) invasion of a certain amount of principal each year. The plan you have now will work, assuming good faith, most of the time, but when it doesn't --------very expensive and lenghtly court battle which could be avoid by some planning at this time.

09-25-2006, 02:53 PM	#15
SteveR Moderator Emeritus Join Date: Jul 2005 Posts: 2,675	Re: 2nd marriages and estate planning I am the trustee for my late wife's trust.* I do NOT report anything to the secondary beneficiaries.* I don't have to since I am the trustee.* I am able to use the assets from this trust as needed for my welfare without reporting this to anyone.* Beneficiaries do not have a say in the trust until the assets are legally transfered to them by the trustee according to the provisions of the trust.* Once a person dies their trust is irrevocable(sp?) so what is in the trust at death stays within the trust (with some expections). The trust is designed to protect the living expenses of the surviving spouse...not any of the kids unless you write it otherwise.* It is a personal matter but in may case my spouse comes before my kids since they are able to earn a living on their own and I know they will be taken care of once my spouse and I are both gone. edited to add: Its your money and your kids did not earn it so why do you think they have a say in how it is used by the surviving spouse? You may choose to leave them whatever is left after you both die but beyond a small chunk of cash, I don't plan on passing much on to my kids after I am gone. This has been discussed with all the kids and they understand that we come first...they come after we are taken care of. __________________ Work? I don't have time to work....I'm retired.

09-26-2006, 03:31 AM	#19
mathjak107 Thinks s/he gets paid by the post Join Date: Jul 2005 Posts: 2,430	Re: 2nd marriages and estate planning Prenups can be pretty worthless in court. Although they look good on paper the reality is that once they go to court all bets are off. They remind me of reading resumes. I never met a resume i didnt like.* * * From what ive learned about them they are based on the fact that they only are upheld if situations havent changed.* In other words you get married ,you have a career ,she has a career, you sign prenups. She becomes ill and unable to work ,or you have a child with problems that requred full time attention ,or an accident left her unable to work. The courts look at each situation to determine whether the prenup should still stand or whether the spouse has a new implied situation different from the situation when the prenup was agreed to. . We learned all this after my new bride and i looked into a prenup of a sort just in case of divorce and after meeting with a few professionals they all said the same thing. They all said they can write one for us but they may not be worth the paper they are written on.* One even refused saying here in new york he wont do pre-nups as he is tired of getting dragged into court himself for documents he wrote that were being challenged.

09-26-2006, 09:27 AM	#20
youbet Thinks s/he gets paid by the post