As more and more of us live longer, second, third or even higher numbers of marriages are increasingly common. There are any number of estate planning and related issues unique to our new (often) blended families. While the Brady Bunch lived almost in a utopia of family harmony, the reality of his, hers and ours when it comes to children often wreaks havoc of traditional notions of planning and inheritance.
Everyone knows a story of “Inheritance Diverted”. The most common is about Sally, and her parents, Sue and Ted. Sue dies suddenly at age 65 after a 25 year marriage to Ted. A year later, Ted remarries Gloria, a lovely woman with no assets, who has a son, Matt, from her first marriage. Ted and Gloria are married 20 happy years when Ted dies leaving his entire estate to Gloria. At Gloria’s death five years later, Matt inherits it all. Sally never inherits Sue and Ted’s accumulated wealth…. According to Sally, Mom is turning over in her grave…all of her hard work passing to a stranger.
In recent years we often hear the story of “Bob” and “Gail” who acrimoniously divorce after a 20 year marriage. Bob would never want Gail to receive a dime more from him. But he neglects to change his life insurance and retirement plan beneficiaries. Ten years later, Bob dies leaving his entire estate by Will to his longtime companion, Kelly. He believes that this does it all. In fact, while many state’s laws automatically terminate the rights of an ex spouse in most assets, they do not control everything – particularly those where a valid beneficiary designation exists and has not been changed. Retirement plans governed by ERISA follow Federal law; and the courts have held that even if state law disinherits an ex spouse, the beneficiary designation on those plans controls – even if long out of date. Kelly is excluded and Gail is left to pass those inherited assets on to her new husband (Bob detested him) and her pet charity (to which Bob was strongly opposed!).
According to the Centers for Disease Control and Prevention, we are seeing longer and longer average life expectancies (over 80 in some states!). With longevity, comes serial blended families. They have become common, if not the norm.
A well considered, carefully implemented estate plan means that your intentions will be realized, regardless of how blended your family becomes. For help with these or any other legal issue, please consult with a qualified estate planning attorney at Gartenberg Howard, LLP.