by Samuel V. Butcher, Esq
Maggie continued working after the untimely death of her late husband Tom, more out of a need for socialization than stability. She could easily have retired in her mid-forties on the money she and Tom had socked away along with Tom’s generous life insurance proceeds. Maggie’s biggest concern was helping her two teenage daughters cope with the loss of their father and prepare for college.
Joe was recovering from a failed marriage that had made him so miserable that he was willing to give up far more than his fair share of the marital assets to end the relationship. After the divorce, he emerged with little more than the family home, subject to a huge mortgage and a court order to pay alimony for the next five years. Joe had won the only victory he really cared about in the divorce, fully custody of his four children, ranging in age from five to fifteen.
Joe and Maggie met at an event for single parents. They were immediately attracted to each other and began a courtship that led to the altar. Maggie’s friends suggested that she consider a prenuptial agreement but Maggie feared the risk of creating an adversarial relationship with Joe and, besides, she was certain it would never be needed, so why spend the money.
Throughout the years of their happy marriage, Joe and Maggie paid off the mortgage on Joe’s house and contributed to the common household expenses and joint savings. Joe and Maggie found themselves in a dilemma over how to provide for each other on the death of the first spouse, and equitably distribute their assets to their children from a previous marriage. Both knew that they had put off their estate planning far too long out of fear that sitting down with attorney might lead to a serious dispute and disrupt an otherwise happy marriage.
The situation in which Joe and Maggie find themselves is not uncommon. Spouses with blended families are often reluctant to engage in estate planning for fear that confronting sensitive issues may lead to marital discord. Sitting down with an experienced estate planning attorney however, can actually turn out just the opposite. A skillful attorney can be both a facilitator and a problem solver to help clients navigate difficult issues and come up with solutions that they never knew existed including:
• Utilizing a trust based plan to allow the spouses to separate their individual assets from the joint assets of the marriage. For example, Maggie could leave her individually owned assets acquired from her first marriage, such as the proceeds remaining from Tom’s life insurance, solely to her two daughters. While Sam’s house, on the other hand, might be placed in a joint trust to be left to all of the children of both spouses on the death of the second spouse to die, since both worked to pay off the mortgage and contribute to the property taxes and upkeep of the home.
• Keeping matters private between the couple. Trust based planning provides individuals far greater privacy since only the beneficiaries are entitled to a copy of the trust when distributions are made. Unlike a Last Will and Testament, there is not a public record of the trust.
• Continue to ensure protection of your children’s interests with remarriage protection. This type of protection may limit the amount of access a surviving spouse has to the joint assets if the surviving spouse chooses to remarry. Such protection can ensure that funds will be left for your children and not the newest spouse.
The attorneys of Butcher Elder Law have the tools to provide all couples, including those with blended families, solutions that can satisfy both spouses, protect the children of each, promote harmony, and prevent chaos when something happens, because no matter what, sooner or later, something is going to happen. Don’t delay planning because of fear of the unknown. Do your family a favor. Plan now to make things easier on them later and give yourself some peace of mind.