A Lawyer's Take On Estate Planning In Your Second Marriage

10/07/2016 02:12 EDT | Updated 10/07/2016 02:12 EDT
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A couple holds hands showing their wedding rings during a mass wedding of 250 couple in Manila on October 10, 2010. The date 10/10/10 sparked a wedding frenzy, a wildly popular day to get married for couples who are superstitious, honoring their culture or just wanting a really cool anniversary date. AFP PHOTO / JAY DIRECTO (Photo credit should read JAY DIRECTO/AFP/Getty Images)

It is not uncommon for people to have more than one spouse or common-law partner in the course of their lives. Someone who is getting married for a second time, whether because of the death of a first spouse or following divorce, likely has an understanding of the legal implications of marriage. Dealing with the estate of a spouse or the division of assets after a breakdown of marriage illustrates how building a common life as a married couple creates legal entitlements and obligations.

In a situation where one or both spouses have been previously married, a trip together to the lawyer to prepare wills might be a familiar exercise. It might come as a surprise to the couple that making an estate plan for a second marriage is a very different endeavor than that exercise within the context of a first marriage, from the lawyer’s point of view.

Estate planning for a couple where one or both have children from a previous relationship is more difficult than estate planning for a couple with no children or who share children. The task becomes more complex where a step-parent treats a spouse’s child as their own, where the couple has or plans to have children together, or where there is a significant age gap between the children from the first relationship and the second.

It is important to be as clear as possible with the lawyer who is assisting in creating or updating an estate plan about any potential sources of tension.

For example, children from a first relationship might resent a step-parent, step-siblings or half-siblings for real or perceived favouritism. A surviving spouse might feel entitled to their deceased spouse’s estate after death and challenge any restrictions placed on their inheritance that benefits the late spouse’s former family.

These very common blended-family situations can create tension that can explode into estate litigation if the drafting solicitor is not very careful. While it is common for one lawyer to accept a “joint retainer” for young and childless couples, some lawyers may refuse joint retainers for couples who are blending their families and who wish to name children of a prior relationship as residuary beneficiaries of their estates after the death of their surviving spouse.

Instead, a solicitor might act for one spouse while referring the other to another solicitor for independent legal advice. Even solicitors who feel such an arrangement might reflect an overabundance of caution will take special steps in estate planning for blended families.

A common practice for estate planning within the context of a second marriage is to provide a “life estate” to the surviving spouse, and a “gift over” to the testator’s children. That means, for example, that when dad dies, the matrimonial home and all of his money are held in trust for his widow for life, during which time she is able to make use of these assets without the right to bequeath them to beneficiaries of her own estate. The surviving spouse may live in the house, spend the income from dad’s money, and depending on the terms of the will, encroach on the invested residue of her predeceasing spouse’s estate.

Even a relatively simple spousal trust arrangement involves comprehensive planning before death. It may make administering the estate more expensive and complex, as final distribution of the estate is postponed indefinitely and a trustee must administer the life interest. The trust arrangement may, in itself, give rise to conflict, if the surviving spouse believes that he or she ought to receive an interest in the estate without limitations.

It is important to be as clear as possible with the lawyer who is assisting in creating or updating an estate plan about any potential sources of tension. Understanding how the dynamics of your blended family might affect the administration of the estate will help the lawyer draft a will that serves the needs of your specific family and eliminate potential sources of conflict. Communicating to all interested parties about what to expect after the death of each spouse can also help ease tensions and avoid surprises after death that often lead to estate battles.

Ian Hull and Suzana Popovic-Montag are partners at Hull & Hull LLP, an innovative law firm that practices exclusively in estate, trust and capacity litigation. To watch more Hull & Hull TV episodes, please visit our Hull & Hull TV page.

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