04 Aug Living Trusts and the Baggage of Second—or Third–Marriages
There are many things to keep in mind as you plan the distribution of your assets among your heirs for your Living Trust. But for those in their second or third marriages, replacing the name of the former spouse with that of the new one on all assets, including life insurance policies and Deeds, then making sure they all get transferred into the Trust often means that this process requires significantly more attention.
Husband dies unexpectedly in his 50s, without a Living Trust
In a recent example, one woman’s husband of five years died. He had children from a first marriage, a family business in his name, lots of debt and no Living Trust—he was in his late 50s, after all, and he, like many people, figured that he had plenty of time to do this when he got old. Unfortunately, “old” never came. He also owned timeshares in Hawaii and Mexico, a cabin in Tahoe and oil rights in Oklahoma. His widow’s name had never been transferred to the Deeds of any of these properties.
In addition to the costs and delays of the inevitable Probate, this grieving widow now had to fight with her husband’s sister to keep her own interest in the family business, file a lawsuit to divide real estate her husband owned with a friend of theirs and fight with a large life insurance company over a life insurance policy on which her husband had forgotten to make her the beneficiary.
With second and third marriages come baggage and complexities
These days 50% of US marriages end in divorce. And now, there’s an even greater percentage of couples over 50 getting divorced. There’s a greater likelihood than ever before that married couples will grow old with their second or even third husband or wife. There is a common misconception that all assets owned by husbands and wives automatically belong to the other at death. This can be the case but it’s not an automatic rule—especially for these divorced couples whose financial landscapes are more complex. It’s not uncommon that a husband and wife, especially in a second or third marriage, neglect to get all of their assets into both of their names, then get them moved into their Living Trust.