Family Dysfunction Part IV: Second Marriages

Posted on: Friday, December 28th, 2012

Doug Chalgian

I advise clients who are in second (third, etc.) marriages, that their children do not like their second spouse.  And I’m not joking. I tell clients that although they may be the exception to the rule, my experience tells me: offspring don’t like the man or woman who replaced their parent in the hearts and home of their other parent.  No matter how they act while you are alive, the knives will come out when you’re gone.  It’s just the way that plays out. Deal with it.

An article I wrote on this topic was recently published in the Michigan Funeral Director’s Journal.  Click here to read that article: My Kids, Your Kids, His Kids, Her Kids: Why Second Marriages Make Estate Planning a Challenge.

In setting up estate plans for people who have children that are not the children of the spouse they have at the time of our meeting, I like to be frank about the potential for litigation after they die, and I like to avoid creating documents that invite that litigation.  In fact, if this series on family dysfunction were done in order of issues most likely to give rise to litigation, second marriages with children from prior relationships would be my number one indicator.

The most common (thought certainly not the only) source of litigation in these situations arises as a result of the tool many planners (including myself at times) use to accomplish the primary objective of the spouse who is doing the planning.  That objective is: I want my estate to provide for my spouse if s/he survives me, but when s/he passes, I want the rest to go to my kids.  This objective is, as they say, easier said than done.

The detail in which this devil sits is the standard placed on the access of the surviving spouse to those assets that continue in trust after death for the benefit of the surviving spouse, and the selection of someone to enforce that standard.  If you say that I want the assets to continue in trust so as to allow the surviving spouse to enjoy the standard of living we enjoyed while I was alive (or any other “ascertainable standard”), after you’re gone, someone has to decide as to particular requests for distributions, whether that request is compliant with the standard.  If that decider (the trustee) is one or more of your kids, you’ve created a serious conflict of interest. A professional trustee works well here, if you go down this path.

You also have to consider such things as:

  • What if my surviving spouse remarries or cohabitates?
  • If I leave a house, can the surviving spouse sell it and move somewhere else?
  • Does the trustee get to consider the other resources that may be available to that surviving spouse, and does that mean s/he has to report her assets and income to the Trustee?

An alternate approach can be to dedicate specific assets to go to the kids at the death of the first spouse to die, and to leave the remaining assets to the surviving spouse without restriction.  Insurance can sometimes work well here.

Another popular source of litigation is if assets were transferred from the parent-spouse to the surviving spouse during the life of first spouse to die, especially when that parent-spouse suffered from cognitive impairment during the period when assets were transferred.

When estate plans change to favor the surviving spouse later in the game, and/or during a period when the parent-spouse was suffering from some level of cognitive impairment, look out.

Another bad sign, but oh so common, is when the second spouse actively engages in the alienation of the parent from the children.

These issues make planning for second marriages challenging, and cookie-cutter approaches often lead to frustration and litigation after death.

mm By: Doug Chalgian
Doug Chalgian