PenPenWrites

Life is full of surprises. Some of them are more delightful than others. If you’re divorced or widowed and you meet a new romantic partner, that’s surely a joy for you but not necessarily your kids. They might be accidentally disinherited,

That is ground zero for those who find romance later in life. Their kids may be genuinely happy for you; they may be relieved that there’s someone out there who’s willing to take on your worries, anxieties and late-night phone calls. They may also be concerned about where that leaves them, inheritance-wise. If there now a new step-parent and family that stands to inherit some of their family’s good-gotten gains.

A Wall Street Journal story was blunt about the problem. Addressing the potential disinheritees, its reporter wrote:

• Let’s be blunt: If you have a single mom or dad in their 70s or older who’s in a new, serious relationship, you may worry about your inheritance.
• If your parent remarries — and then dies — will the surviving spouse wind up with a big chunk of the estate that would’ve gone to you?

The solution might seem simple enough: If you don’t want to accidentally disinherit your kids, don’t draw up a new will. But simple is not correct. In most states a new spouse has a right to a portion of your estate, regardless of what an older will says. Asking that spouse to promise to fork over a share of your assets to your kids is no guarantee that your kids will receive their due. “It never happens” is how one financial planner put it.

There are tools to assure that your adult children’s inheritance survives the new coupling.

Pre-nups are not just for the rich and famous. A prenuptial or postnuptial agreement can explicitly note which assets a parent has earmarked for their children and it can waive the spouse’s statutory right to claim those properties.

QTIPS are not just for ears. A parent (particularly one who has more assets and higher earnings than their new spouse) can leave assets, such as a family home, in a trust for the surviving partner. Once that partner dies, the remaining principle passes to the adult kids.

Irrevocable Trusts mean what they say. Assets placed in an irrevocable trust are protected and generally cannot be altered or claimed by a new spouse

Designated Beneficiaries get what’s coming to them. Parents who remarry can update their life insurance, 401(k) and IRA beneficiary forms to explicitly name their children. These designations supersede instructions left in a will.

One other tip. If you hire an estate planning attorney, keep that lawyer as your exclusive province. Attorneys have a fiduciary duty to do what’s best for their client. If you and the new love retain an attorney together, the attorney has a duty to both of you, but the surviving partner will receive the benefits of that lawyer’s duty.

photo: Palo Coleman

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