Dolores M. Coulter

Attorney at Law

8341 Office Park Dr. Ste C

Grand Blanc, MI 48439

Phone:  (810) 603-0801




Second Marriages

Dolores M. Coulter © December 2007

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Q:  My husband and I have been married for 30 years.  It is a second marriage for both of us and we both have children from our first marriages.  How can we be sure that after the second spouse dies our estate will be divided among our combined children and not just the children of the second spouse? 

Estate planning for a husband and wife in second marriages adds additional complications to the planning process.  As with all estate planning, there is no “one size fits all” approach.  The planning process takes into consideration the client’s estate planning objectives, financial circumstances, family relationships, values, and interests.  The goal is to develop a plan that best achieves those objectives.  The process is complicated by the fact that we are planning for the future, and no one knows for certain what the future will bring.  In addition, the planning process typically involves evaluating various options, each with its own advantages and disadvantages.  Unfortunately there is no simple answer to your question.

In planning for clients in a second marriage, no one knows which spouse will die first, how long the surviving spouse will live, what the surviving spouse’s needs will be, or what assets will remain after the death of the surviving spouse.  Typically each spouse wants to assure that their children receive a share of their estate but also that the surviving spouse is not impoverished. There are numerous approaches that can be considered, but each is subject to future uncertainties and its own pluses and minuses.  If the couple wants to assure that there will be assets left to divide among all of the children after the death of the surviving spouse, one alternative is for each spouse to maintain some assets in their separate name and provide in their will, or by beneficiary designation, that upon their death all or a portion of their separate assets will be paid to a trust. A variation of this would be for each spouse to create a separate trust during their lifetime and transfer some of their assets to their trust. The couple could hold other assets in joint ownership, and those assets, upon the death of the first spouse, would pass directly to the surviving spouse. Each spouse's trust would provide that upon that spouse's death their trust would continue, and the income from the trust would be used to support the surviving spouse, but the assets in the trust would  be preserved and would be divided among both spouses' children upon the surviving spouse’s death.  A disadvantage of this approach is that the surviving spouse might not be able to meet his/her needs with just the income from the trust. 

Another approach would be for the parties to create a joint trust and transfer some or all of their assets to the joint trust.  They would include provisions in the trust for what happens after the first spouse dies.  They would have to decide whether all of the assets should remain in the trust for the benefit of the surviving spouse, whether some distributions should be made immediately to their children, whether the trust should become irrevocable after the first spouse dies, and how much control the surviving  spouse (or a successor trustee) should have over distributions from the trust.  If for example the surviving spouse (or a successor trustee) had the authority to make distributions from the trust assets for the support of the surviving spouse, there may be nothing left for the children after the surviving spouse dies.

In some instances, a couple may decide to execute a prenuptial or postnuptial agreement in which they agree that upon their death the assets held in their name would be distributed to their children. Each spouse would also agree to waive any claim to a share of the other spouse’s estate.  They would each keep some or all of their assets in their separate name or in a separate trust. They would each write a will that was consistent with their agreement. This would allow each spouse to leave the assets in their name or in their trust to their children upon their death.  The children of the surviving spouse would not inherit their parent’s property until some time in the future and, depending on the circumstances, they may receive a larger share or a smaller amount that the children of the spouse who died first. 

This is only a brief summary of some alternatives.  There are also additional factors that may have to be considered.  If either spouse needs nursing home care at some point and has to apply for Medicaid, the couple may have to make drastic changes in their financial and estate planning.  If either or both spouses have substantial financial assets that exceed the exemption amount for federal estate taxes they will also have to consider the tax implications of any estate plan.  However the estate tax exemption is $5,450,000 for 2016 so for most individuals there is no need to consider complex estate planning strategies for minimizing or eliminating federal estate taxes.




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