Estate Planning in Second Marriages

There are some specific challenges to estate planning in second marriages in New York. It is important for spouses who have previously been married to discuss their financial situation and how they want their property to be handled in blended family situations. These matters should be discussed candidly, but also it is important to consult an experienced New York City estate planning lawyer who can carefully craft the wills or trusts necessary to make it possible for your property to be distributed according to your wishes and needs.

Estate laws in New York provide protection for current spouses to avoid their becoming disinherited. If you die intestate, which means dying without a valid will, at least 50% of your estate will be distributed to your current spouse. Your current spouse is also entitled to be the estate administrator under the Surrogate's Court Procedure Act section 1001 ("Order of priority for granting letters of administration"). Moreover, there is a 100% estate tax deduction for all estate assets passing to a surviving spouse under federal and New York tax provisions. These laws incentivize giving your current spouse all of your assets.

However, not every person wants to give 50% of an estate to a current spouse. For example, some people would prefer to give a more substantial portion to multiple children from one or more prior marriages. Sometimes a greater amount of an estate should go to a child with special needs from a prior marriage. Some people would prefer to have another person besides the current spouse serve as the executor of the will.

In most second marriages, it is crucial to draft wills, living trusts, and powers of attorney in accordance with what each spouse has decided and what their obligations are. For example, one or both spouses may have obligations to pay alimony, retain a former spouse as a beneficiary of a retirement account, or distribute property in a particular way through a divorce agreement with a former spouse. There may also be guardianship issues in connection with minor children, which an attorney also can help you address.

The way that assets and property are held will affect the way that they should be distributed after a spouse's death. Additional factors that will influence estate planning are the assets that each spouse brought into the second or subsequent marriage, whether children are involved, the ages of the spouses, marital property laws in New York, and how accounts in the family are held.

Some spouses may have accounts in which funds automatically transfer on death or that are held as joint tenants with rights of survivorship, and in that case, there is a clear indication of to whom the assets will go. If you wish to change the name of a beneficiary on an account, and it is possible to do so, this should be done as part of estate planning.

It is important for parents to realize that when proper estate planning is not done with a new spouse in mind, after your death, your surviving spouse can disinherit whomever they wish, including your children from a prior marriage. It may be possible to create a trust that ensures that you are leaving something for your children from a prior marriage.

For example, it might be appropriate to create a qualified terminable interest property (QTIP) trust. This trust provides a stream of income from the trust to a surviving spouse without needing to pay estate taxes. However, the surviving spouse does not get title to the income-producing property, and the trust documents will control where the property goes after the surviving spouse's death. Using a QTIP trust can ensure that your spouse does not disinherit children from a prior marriage. Other tools to be possibly considered include credit shelter trusts and irrevocable life insurance trusts.

Attorney Jules Haas has over 30 years of experience handling estate planning in second marriages and other complicated situations. He works diligently toward achieving client satisfaction. Our firm represents people throughout New York City, including in the Bronx and Queens, as well as in Kings, Richmond, Nassau, Suffolk, and Westchester Counties. Call us at (212) 355-2575 or complete our online form.