Whether a marriage ends in divorce or due to the death of a spouse, it’s never easy. For many people, though, no matter how difficult a marriage or its aftermath, the silver lining is the children that came from the marriage. For many people who are divorced or widowed, their children are what keeps them going through the hard times and sadness.
If you have weathered the end of your first marriage, you may have been lucky enough to find love the second time around. Remarriage may offer the prospect of a bright future that you didn’t dare to imagine during your darkest days. And, of course, you want your children to share in that joy.
While you’re basking in the glow of new love, don’t forget to protect the interest of your old loves—your children. It may feel like you are bringing together a new family that will be together forever. But if something happens to you, your children’s inheritance could be vulnerable. No matter how wonderful your new spouse, it’s not their responsibility to protect your children’s interests. It’s yours. So now let’s talk about how to do that.
In a first marriage, estate planning is important because you want to ensure the security of your spouse and minor children. If anything happens to you, your surviving spouse, who is also the parent of your minor children, will use your estate to provide for and protect your family.
In a second marriage, the dynamic is a bit different. Hopefully, your new spouse and children get along well. But when the children are older, possibly adults, there is likely to be more tension between them and your new spouse. If your first marriage ended in divorce, your children may feel that becoming too close to your new spouse is disloyal to their other parent. If your first marriage ended when your spouse died, your children may feel that accepting your new spouse is a betrayal of their dead parent’s memory. And no matter how well your children get along with your new spouse, they probably won’t share the same bond they have with the parents who raised them.
Children may also worry that a new spouse is going to “steal” their inheritance. You are not obligated to leave your adult children anything if you don’t want to, so making an estate plan that provides for a new spouse isn’t “stealing” from your children. That said, you probably want to leave assets to both your children from your previous marriage, and the spouse from your subsequent marriage. And in Minnesota, you need to be intentional about it.
Nobody really dies without an estate plan. That’s because if you don’t create one, the state does it for you. It’s called the law of intestate succession: how your assets will pass after your death if you don’t have a will, trust, or other estate plan in place.
The law of intestate succession is intended to approximate what most people would do if they had made an estate plan. Such “one size fits all” law rarely fits anyone well. Here’s how it works in a second marriage when the deceased spouse has children from a prior marriage or relationship: the surviving spouse takes the first $225,000 plus half of the remainder of the intestate estate.
Let’s say you and your new spouse have a joint bank account containing $50,000. You own a house worth $300,000 that you purchased as “joint tenants.” You also have an investment account in your sole name with $225,000 in it, a car worth $25,000, and a 401(k) worth $500,000. If you died tomorrow without an estate plan, how much would your spouse get, and how much would go to your children from your first marriage?
You probably just added up the value of the assets above, getting a total of $1.1 million. Then you probably subtracted $225,000—the amount the surviving spouse takes off the top of an estate. That leaves 875,000. Then you probably divided that in half, assigning half to the surviving spouse, and half to the children. That’s $437,500. Not too bad, right?
Perhaps not—except that your math is wrong. The entire joint bank account goes to the surviving account holder, so that doesn’t factor into your intestate estate. Likewise, the house you own jointly with a spouse goes entirely to the survivor, so remove that from the pot. And by federal law, your surviving spouse is the beneficiary of your 401(k).
Now your intestate estate consists of your $225,000 investment account and your car. Your spouse gets the first $225,000 off the top of the estate, and half of the remainder. That means your children from your first marriage inherit $12,500—half the value of your car. The remaining $1,087,500 that you thought made up your estate goes to your surviving spouse, whether you’d been married fifteen years or fifteen days.
If that’s not how you would have arranged things, you need to create an estate plan.
The good news is that simply creating an estate plan, rather than leaving things up to state and federal law, is likely to make things a lot easier on a surviving spouse and children. And you have multiple options.
If you’re creating an estate plan after divorce or a spouse’s death and haven’t yet remarried, you can incorporate a prenuptial agreement into your estate plan. Many people are surprised to realize that a prenup isn’t just a plan for divorce; it can also dictate what property will be inherited by a future spouse. If you have already remarried, a postnuptial agreement is an option.
You can also make a will that specifies what your spouse, children, and other intended heirs will receive from your estate. A will also allows you to bequeath specific items to certain people, so you can be sure that your children receive items of sentimental value to the family.
If you want to avoid probate, a living trust can be an essential part of your estate plan. You can use and enjoy assets in the trust during your life, and your successor trustee can then pass them to your beneficiaries outside of probate after your death.
The bottom line is that your blended family is unique, and you need an estate plan that is, too. We invite you to contact Mundahl Law to schedule a consultation with an attorney experienced in divorce and estate planning matters.