I am seeing this situation more and more—a husband and a wife have children by previous marriages. When it comes to estate planning, disaster often lurks.
The worst possible solution is to avoid doing anything at all. It happens. I have had husbands and wives so upset with each other that they did not talk for days after leaving my office. Their solution: do nothing. Problem solved? Hardly.
In Georgia, if you are married with children and die without a Will, your estate is divided between your spouse and children. The ratio of the division depends on how many children you have. If you have two children, your spouse gets a third and each of your children receives one-third. If you have three children, your spouse receives no less than one-third and your three children split the remaining two-thirds.
But that is not entirely accurate. If you owned everything with your spouse in joint tenancy with the right of survivorship, then by the terms of the joint tenancy, your spouse would get everything. In other words, the ratios above deal only with probate assets. If your retirement account names your spouse as primary beneficiary, your spouse receives your retirement account. Retirement accounts, joint tenancy property, life insurance, etc., are non-probate assets, assuming the estate is not named as the beneficiary.
Sometimes, children disclaim assets they receive from a parent who dies without a Will, so the surviving parent receives the assets. But, this is typically the case only with children who are born of that marriage, not children from a previous marriage. Think your children are going to disclaim assets for your new spouse who is not their parent? Don’t count on it.
Although it should go without saying, it is imperative that you have a good estate plan. However, it is doubly important when you are married and either you or your spouse have children from a previous marriage. So, if you and your spouse both have Wills that leave everything to each other at the first spouse’s death, and then everything equally to husband’s children and wife’s children at the second spouse’s death (so-called “I love you” Wills) everything should be fine, right? Not really.
Your Will is not irrevocable. As long as you are competent to form a Will, you are free to change its provisions. As an example, consider this: A husband and wife, each with children from a previous marriage, draft “I love you” Wills. Later, the husband dies and all assets pass to his wife. She then contacts her attorney and says, “You know, I never liked his kids, leave it all to my children.” She is free to do so, and her late husband’s children receive nothing.
There are several solutions. First, the husband and wife could leave their assets directly to their own children at their death. The drawback is that husband and wife often want the surviving spouse to have access to those assets. So, an alternative is to leave all assets to the surviving spouse in trust, such as a marital QTIP/credit shelter, then name your own children as remainder beneficiaries when the surviving spouse dies. But, not everyone wants to do that.
Another option is to divide your estate between your spouse and children at the time of death. This ensures that both your spouse and children receive “something,” and often relieves the pressure of deciding between leaving assets outright to a spouse or in trust.
If you are married and either you or your spouse have children from a previous marriage I urge you to:
- Have a Will or revocable living trust, and/or
- Put some serious and unemotional thought into how you want your assets distributed after your death.
Otherwise, it may be that neither spouse’s children inherit anything, and their respective attorneys reap the fruits of your hard work. I doubt you want that.
For more information about estate planning, Wills or trusts, please contact Jeremy L. Lantz of Lantz & Reeves, P.C. at 770-424-8131.