Estate Planning for Second Marriages
ESTATE PLANNING FOR SECOND MARRIAGES
In our world of ever-changing laws, estate planning has become increasingly complex. This is especially true in the context of second marriages. Children from a prior marriage, strained family relationships and rights and restrictions imposed by law illustrate why the complexity of estate planning for second marriages is never simple.
A primary consideration in preparing an estate plan is always the client’s wishes for the disposition of his or her property upon death. In a second marriage, it is common for the client to balance his or her wishes for (and the needs of) his or her surviving spouse and those of his or her children or other family members. Some clients provide for this by dividing assets, either amounts or percentages, among the beneficiaries. However, many clients want a plan in which the surviving spouse is able to maintain the same lifestyle, but want any assets remaining at the death of the surviving spouse to pass to his or her descendants, rather than the descendants of his or her spouse. A client can achieve these goals through the use of a will or revocable trust that provides for an ongoing testamentary trust for the benefit of the surviving spouse. The trust can take many forms; it can authorize the trustee to use the income or principal of the trust for the benefit of either or both the surviving spouse and the client’s descendants.
The trust may name the surviving spouse as the trustee, thus giving the surviving spouse much flexibility and discretion in the use of the trust funds. Or, it may name an independent person, or bank, as trustee and allow the trustee little or as much discretion as is desired by the client regarding the distribution of trust funds. Particularly in second marriages, the client should at least consider an independent trustee, to ease any family tension that discretionary distributions may create.
Estate planning for second marriages is not complete without considering the statutory rights of surviving spouses. New Jersey law permits a surviving spouse to receive an elective share, which is essentially 33 1/3% of all the deceased spouse’s assets.
In addition to the right of a surviving spouse to receive the elective share, the law also provides protection to the surviving spouse and any minor children from a devise to anyone other than a surviving spouse.
Although more complex, with proper estate planning, it is possible for a client to not only provide for the entire family after death, but also to promote harmony among a surviving spouse and children as well as other family members.
Steven W. Tarta, Esq. brings more than 45 years of professional experience to his practice, with a sophisticated focus on Estate Tax Planning, Living Trusts and Elder Law.