In the United States, approximately seventeen percent (17%) of people remarry after the first marriage ends. Somewhat surprisingly, the remarriage rate has dropped for each age group with the exception of the 55-and-older group (57% in 2013 versus 42% in 1960). If you remarry, there is a significant risk that your assets do not end up where you want them to when you die – especially if you have children from your first marriage.

CNBC’s recent article entitled, “Remarried after having kids? Here are tips to avoid accidentally disinheriting them” dives into some practical pointers for how to avoid disinheriting your children accidentally. Below is a summary of the key points of the article with some specific points on Minnesota law.

First things, first. Most people lack even basic planning, including a basic will. If you have no plan in place, your kids may be disinherited if you die first in the new marriage. It is incredibly common for the children from a prior relationship to wonder: what happened to mom’s (or dad’s) assets? Meanwhile, new spouse has a new kitchen and just took a vacation to the Bahamas. CNBC’s article has some good tips for dealing with remarriage with kids – whether they are adult or still minors.

Have a Conversation About Estate Planning

Make sure to have a conversation about estate planning with any adult children and your new spouse. Oftentimes, my clients want their new spouse to be able to access some, or all, of their assets while they are living, but they then want those assets to be distributed to their own children rather than to their new spouse’s children.

Figure out what you want to have happen to your assets. Do you want them to go directly to your children after you die, or do you want your new spouse to have some access to them. What about heirlooms? Things that have sentimental value can often cause the largest fights. Just ask Robin Williams’ family.

While a conversation about estate planning is emotional and sometimes difficult to discuss, making sure your family knows what you want is a critical first step in ensuring that your wishes are followed. However, having a conversation without following up by getting your wishes on paper (through a Will or Trust) can lead to an even larger mess.

If you die without a will (also called dying intestate, or intestacy), a judge will decide who gets your assets, who watches any of your minor children, and who administers your estate. Probate is public. Because of this, it can often lead to fighting amongst heirs who now have a platform to air their grievances. Each “interested party”, meaning heirs, beneficiaries, and creditors, will have a right to be heard. A judge then decides who should inherit what. Meanwhile, while the beneficiaries and heirs are fighting, it is the attorneys who benefit the most. An AARP study all the way back in 1989 concluded that over $2 Billion is spent on attorney fees and other probate related costs every year. You can imagine what those costs are 20 years later.

Here are a few things to consider to ensure that your children end up with the assets you want them to:

Beneficiary Designations on Accounts

Make sure that you update your beneficiary designations after you remarry. Beneficiary designations will trump any directions that you have put in your Will or Trust. Whomever you have listed as a beneficiary will receive the assets of that retirement account or life insurance policy when you die. Can you imagine your ex receiving your assets instead of your new spouse?

The best way to ensure that your beneficiary designations are up to date is to create a list of each account that you own and then contact each account holder to determine who is listed as the beneficiary on each account. Once you have done that, make sure to update any beneficiaries that need updating. If you have minor children, you should be careful in designating them as a beneficiary on your account. If you die with minor children designated as a beneficiary, a Court will likely appoint a custodian over the assets until your minor children turn 18. Once they turn 18, they will receive the assets you left them. An 18-year-old inheriting a bunch of money usually doesn’t end well. Consider creating a Revocable Trust when you have minor children. This avoids probate and you can set up separate trusts within your trust for each of your minor children. Then you get to specify when your children inherit your money – is it age 25? Age 30? That doesn’t matter – what matters is that it is not 18.

Keep in mind also that there are certain rules surrounding your retirement accounts. 401(k) plan rules require that your current spouse must be the beneficiary of your account unless he or she agrees that someone else may be the beneficiary. If you have questions about who should be the beneficiary of your account following remarriage, you should speak with an experienced estate planning attorney and financial planner.

Your Homestead

Generally, remarriage involves owning a home jointly with your spouse. Whether your children will inherit your share of your home will depend on how your property is titled. If your home is owned as “joint tenants with rights of survivorship” or as “tenants by the entirety,” the property will automatically transfer to the surviving spouse regardless of what your will or trust says about who gets the property. If you own the house as “tenants in common,” this means that you have an undivided interest that you can leave to whomever you want through your will. More importantly, you can leave that share to someone other than your spouse if you want. Sometimes the deed to your property does not specify how the property is owned – as joint tenants or as tenants in common. In that case, under Minnesota law, there is a presumption that ownership is as tenants in common. Because of these presumptions and the impact they may have on who inherits your real estate when you die, it is important to review your deeds with an experienced Minnesota estate planning attorney. These, of course, are not the only considerations when it comes to titling your real property in Minnesota. Asset protection from potential creditors and tax considerations may also dictate how your property should be owned.

Your Personal Items

If you want your kids to inherit specific tangible personal property, you should be as specific as possible. This means either including provisions in your will or trust that distribute the particular items to your children, or by having what is called a tangible personal property list in Minnesota. Having such a list allows you to list the items and list the recipients and you avoid having to update your will or trust every time you change your mind on who gets that dusty old set of golf clubs in the garage.

Consider a Revocable Trust

As mentioned briefly above, if you want your kids to inherit your assets, but you don’t necessarily want them to receive it all at 18, or even 21 for that matter, creating a trust to hold that beneficiary’s inheritance is a great way to ensure that the money is not spent all in a couple of years. You select a trustee to manage the trust assets on behalf of your beneficiary. Then, you set the rules as to when and how your children may receive money from the trust. This ensures that the money isn’t spent on a Lamborghini when it should be spent on college tuition.

Adult Children

If you have adult children, communicating with them is key, in addition to communicating with your new spouse. You don’t have to be specific about the exact dollar amounts and accounts that you own, but setting out the general framework of what you want to have happen when you pass away can pay dividends when it comes to avoiding fights among family members. Often times, I offer to have a meeting with my clients children to explain the estate plan and set the expectations ahead of time. The key, of course, is open communication between everyone.

Other Considerations

While the above are some of the main considerations, there are other issues that you shouldn’t forget about.

Legal and Financial Decisions if You Are Incapacitated

Having someone in place who will be able to handle your legal and financial affairs if you are unable to do so is critical. If you don’t have this chosen, your new spouse and your adult children may fight over who should have control over these decisions. If they fight over these decisions, they may have to go to court to initiate a Guardianship or Conservatorship proceeding. Having a simple power of attorney document in place can avoid this fight. By having a power of attorney in place, someone you have chosen will be able to pay your bills, file your taxes, and sign documents on your behalf.

Who Should Make Decisions About Your Health Care

Having someone in place who can handle your health care decisions is also a critical consideration especially when you are remarried. While some states call it a Health Care Power of Attorney and a Living Will, Minnesota calls this a Health Care Directive. Having a Health Care Directive in place allows you to name someone to make decisions for you and it also allows you to specify your wishes about your health care if something happens to you.

By taking a few moments to consider what you want to have happen if something happens to you, you can save your new spouse, and your children from a prior marriage, a ton of heartache by sitting down with an experienced Minnesota estate planning attorney to ensure that you don’t accidentally disinherit your children.

Reference: CNBC, Remarried after having kids? Here are tips to avoid accidentally disinheriting them, (Jan. 17, 2019)

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Zach Wiegand is a Minnesota estate planning attorney and the owner of Gold Leaf Estate Planning, LLC. Gold Leaf Estate Planning is an estate planning law firm that also handles probate and trust administration in Minnesota. We serve the Twin Cities metropolitan area with a focus on estate planning for clients in Burnsville, Eagan, Savage, Prior Lake, Lakeville, Apple Valley, Eden Prairie and the South Metro as well as clients in Woodbury, Lake Elmo, Maplewood, Oakdale, St. Paul and the East Metro. Our firm has offices in both Burnsville and Woodbury (Lake Elmo). The firm also handles probate in Dakota County, Washington County, Scott County, Hennepin County, and Ramsey County and most other counties in the Twin Cities Metro area. Zach has been named a Minnesota Super Lawyer – Rising Star for 2017, 2018, and 2019, and he is a member of WealthCounsel – a national organization of estate planning attorneys dedicated to practice excellence. You can contact Zach via e-mail at zach@goldleafestateplanning.com or by calling (952) 658-6503. Gold Leaf Estate Planning is located in Burnsville at 3000 County Road 42 W., Suite 310, Burnsville, MN 55337 and in Woodbury/Lake Elmo at 8653 Eagle Point.

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