5 Florida Estate Planning Concerns for 2nd Marriages (and 3rd Marriages, too)
OK, let’s say that you have adult children from your first marriage and they live outside of Florida. And… you are getting married to a second or third spouse. Regardless, have you thought of what yourfinancial life might be like if your adult children from a previous relationship don’t like your latest spouse? Do you think that your adult children will hate their step-parent? Jealous? Do you think that your latest spouse might not get along with your adult children? Well, here are some Florida estate planning issues and also Florida guardianship and dementia issues to consider if you have a 2nd or 3rd spouse and adult children. Remember: your kids are probably already counting their expected inheritance and think your spouse spends too much. And your spouse is mad that he or she signed that damn prenuptial agreement. Don’t forget: we are living longer, so there is a greater chance than ever before that we will become incapacitated or incompetent before we die. What would life look like if you are the subject of a Florida guardianship due to Alzheimers for you, your spouse and your adult children? I see too many Palm Beach guardianship litigators in that picture.
1) Not separating financial lives. Your 2nd or 3rd spouse hates your adult children from a prior marriage. And your adult children don’t like their step-parent. So, why in the world put them in the same trust? The only ones who end up getting trust money are the lawyers. How can you avoid this? Separate the inheritances. Buy one life insurance policy for your spouse and that’s what he or she gets (if they signed a prenup). Give the rest of your estate to the kids. Or; vice versa. Give your estate to your spouse and buy a life insurance policy for your kids: or give them one specific asset like a house, valuable piece of land, IRA or mutual fund account. Don’t put the adult children you have in the same financial stew as your latest spouse.
2) Appoint a 3rd Party to Run Your Estate. Your adult children want to be in charge and so does your latest spouse. Don’t have a multi-person committee run your Boca Raton estate or your Florida revocable trust. So, hire a professional to be executor or trustee. And I don’t mean a probate lawyer: consider a bank or trust company which is set up to do these things and has published fee schedules so you know upfront what you will pay. Don’t pick favorites: pick an independent third party like a bank. Oh yes… your adult children and spouse don’t have the time nor experience to run an estate, invest money or let alone administer a trust.
3) Anticipate Incapacity. We are living longer but at some point in time, odds are that we will become incapacitated before we die. Who will make your health care decisions ? Financial decisions? Who will support your spouse if you cannot because of dementia, or Alzheimers?A lot of people make the mistake of naming their spouse as their personal guardian or health care decision maker but put the kids in charge of the revocable living trust or as Floridapower of attorney for financial reasons. That means if you are incompetent, or incapacitated, whether you have a guardianship or not, your spouse has to go hat-in-hand to your adult children to ask for money. If they hate each other, that’s a bad situation. Avoid this by allocating accounts now (e.g. your brokerage account becomes a joint account with your spouse) or putting in special language in your trust permitting living expense payments to your spouse while you are living but incompetent. Although most states say that each spouse has a legal duty to support the other spouse, having it spelled out in the trust is better. Also, if your spouse is the one waking you in the morning, taking you to the doctors appointments, remembering your prescriptions, and putting you to bed at night, consider having a bank or trust company manage your money. They are independent and are used to working with budgets. Your spouse can make the health care decisions for you, and you have an independent party to go to if she needs more funds.
4) Anticipate Guardianship Litigation. In the old days, the family fought over your money when you died. Not any more. They don’t wait to fight over their inheritance: they want to have a say in their inheritance now, as well as your person and property. Even when you have a power of attorney, or Florida revocable trust (so called “lesser restrictive alternatives to a guardianship”) sometimes adult children file for guardianship to control you and your money. Many times, the focus is your latest spouse: the kids are worried that your spouse is taking your money, or spending too much, which means their inheritance will be smaller. Consider who should be guardian for your person and property if a Palm Beach guardianship is filed, or whether you can avoid one with a well drafted power of attorney, revocable trust and health care proxy or power of attorney for health care decision making.
5) Get a Prenup or Re-Examine the Prenup. Before you tie the knot with that second or third spouse, consider agreeing up front what their inheritance is if you die. But consider avoiding the “you take nothing” prenup and instead consider a staggered prenup that gives your latest spouse more for each year you are married. Hey, if the marriage works out and you end up being married 15 years, do you really want her or him to get nothing if they are taking care of you in your golden years? And remember: you can’t always change the prenup later. What if you lose capacity before you can change the prenup?