29 Nov 20210 Comments
Second marriages can feel like a fresh start. But when it comes to estate planning, balancing loyalty to your existing family and children with a desire to provide for a new spouse must be considered, along with the following:
In New York, if you die without a properly executed Last Will and Testament, you have died “intestate,” meaning the distribution of your assets will be determined by New York Law. For example, if you are survived by a spouse and children, your spouse receives the first $50,000 plus one-half of your estate with your children sharing the remaining one-half. As such, it is important that a Last Will and Testament be executed that properly reflects your wishes.
2. Pre-Nuptial Agreements
In New York, you cannot disinherit your spouse unless you have agreed to in a contractual agreement, such as a pre-nuptial agreement. This is because, under New York Law, each spouse has a right of election to receive the larger of $50,000 or one-third of the deceased spouse’s net estate, known as the “elective share.” Regardless of what one’s Last Will and Testament provides, the surviving spouse can still seek their elective share, unless they have waived said right in a pre-nuptial agreement. While not the most romantic gesture, the execution of a pre-nuptial agreement may be prudent before a second marriage.
3. Jointly Held Assets
If you and your spouse own property “joint with rights of survivorship,” it passes automatically to your surviving spouse. Individuals in a second marriages often keep their assets separate from their spouse and open new joint account(s) for the assets they would want to pass automatically to their surviving spouse.
4. Life Estates
Another common gesture is to allow the surviving spouse, who does not own the primary residence of the couple, to remain in the home after their spouse has passed away. However, the remainder beneficiaries of the property may become concerned as to whether the surviving spouse has the ability to maintain the home and pay for its expenses. Additionally, questions may arise as to what to do if the spouse has to go to a nursing home or assisted living facility: does the spouse’s life estate in the property terminate? These are questions that need to be considered. An option may be to leave the primary residence outright to the spouse in lieu of his or her receipt of other assets, or to allow the surviving spouse to remain in the home for a period of time, such as two years, in order to allow him or her to arrange for alternative housing.
5. Marital Trusts
A trust can be established for the surviving spouse’s benefit. These trusts can be created within one’s Last Will and Testament or through probate avoidance tools, such as Revocable Trusts. Additionally, the trustees of the trust for the surviving spouse can be the children, friends or relatives of the creator of the Trust, who can ensure the funds are not depleted imprudently during the surviving spouse’s life. Alternatively, the Trust can provide that the spouse receives the income of the trust for their life. Once the surviving spouse passes away, the remaining funds can then be distributed to the creator’s children.
6. Life Insurance
One can name a second spouse as a beneficiary on a life insurance policy as a means of providing for them at death. The insurance can also be owned by an Irrevocable Trust, which would remove the value of the insurance from one’s taxable estate upon death. The trust can provide that the income and/or principal can be used for the support of the surviving spouse during his or her life.
Each family’s situation is different and this list of considerations is not exhaustive and only examples of one’s options. If you are considering a second marriage or already remarried, it is important to speak with an estate planning attorney who has worked with clients who have had multiple marriages to discuss structuring an estate plan that fits your needs.