PEACE OF MIND
Today, roughly one in four divorces involve those over 50, the trend has garnered its own nickname: “Gray divorce.” The divorce rates for this demographic have doubled in the past 30 years and tripled for those over 65, according to a study.
According to Bloomberg.com, the standard of living for women drops by some 45%, and roughly 21% for men. Given the significant decrease in income and the fact people are living longer, it’s no surprise that many folks choose to remarry.
And those who do get remarried bring children from previous marriages into the new union, increasing the number of blended families. Regardless of age or marital status, all adults over age 18 should have some basic estate planning, but for those with blended families, estate planning is particularly vital.
Blended families who have yet to create a plan or fail to update their existing plan following remarriage are putting themselves at major risk for accidentally disinheriting their loved ones. Such planning omissions can have terrible unintended consequences.
Here are two different hypothetical scenarios to show how a failure to update your estate plan after a remarriage has the potential for devastating consequences and how these negative outcomes can be avoided by updating your estate plan after you remarry.
Scenario #1: Accidentally disinheriting children from a previous marriage Jim has two adult children, Alex and Beverly, from a prior marriage. He marries Cathy, who has one adult child, David. The blended family gets along well, and because he trusts Cathy will take care of his children in the event of his death, Jim leaves everything to Cathy.
After just two years being married, JIm dies suddenly, and his nearly $1.4 million in assets go to Cathy. Cathy is extremely distraught following Jim’s death, although she planned to update her plan to include Alex and Beverly, she never gets around to it, and dies just a year after Jim. Upon her death, all of the assets she brought into the marriage, along with all of Jim’s assets, pass to Cathy’s son David, while Alex and Beverly receive nothing.
By failing to update his estate plan to ensure that Alex and Beverly are taken care of, Jim left the responsibility for what happens to his assets entirely to Cathy. Whether intentionally or accidentally, Cathy’s failure to include Alex and Beverly in her own plan resulted in them being entirely disinherited from their father’s estate.
Scenario #2: Accidentally disinheriting your spouse
Ed was married to Fran for 30 years, and they had three children together, all of whom are now adults. When their kids were young, Ed and Fran both created wills, in which they named each other as their sole beneficiaries. When they were both in their 50s, and their kids had grown, Ed and Fran divorced.
Several years later, at age 60, Ed married Gwen, a widow with no children of her own. Ed was healthy, so he didn’t make updating his estate plan a priority. But within a year of his new marriage, Ed died suddenly in a car accident.
Ed’s estate plan, written several decades ago, leaves all of his assets to ex-wife Fran, or, if she is not living, to his children. State law presumes that Fran has predeceased Ed because they divorced after the Will was enacted. Thus, all of Ed’s assets, including the house he and Gwen were living in, pass to his children. Gwen receives nothing, but a statutorily allowed life estate in the home so long as she can afford to live there.
By failing to update his estate plan to reflect his current situation, Ed unintentionally disinherited Gwen and forced her into a precarious financial position just as she was entering retirement.
Bringing families together
Along with other major life events like births, deaths, and divorce, entering into a second (or more) marriage requires you to review and rework your estate plan.
This article is a service of Lasca Arnold Pendley. I don’t just draft documents; I ensure you make informed decisions about life and death, for yourself and the people you love.
