The Second Wife’s Guide to Estate Planning


Cemetery photo for blogI have been to two family funerals in as many weeks, and after each one, I was reminded once again how few of us actually leave our affairs in order when we go. This is especially true for today’s modern, blended families, where settling the estate can be more complicated than anyone dreamed possible.

When my husband and I were about to be married under the care of the Fort Worth Monthly Meeting of the Religious Society of Friends, the Meeting appointed a clearness committee of married Friends to help us decide if we were ready to take the plunge — and whether or not the Meeting was willing to take us under its care.  It’s a Quaker tradition of long standing, and I thought at the time that it was unnecessary because both my husband and I had been married before, had known each other for many years, and thought we’d done a pretty good job of planning the whole thing out.

Boy, was I wrong! The questions posed to us by the committee focused on things we hadn’t even thought about — and one of those was estate planning. Here are four questions they asked that I couldn’t answer.

  1. My husband and his ex were married for nearly 20 years, meaning that she has rights to any pensions and social security benefits he might collect. What did that mean to me and my retirement planning? (Answer: Not much. Multiple exes can collect against the same former spouse’s earnings with no reduction — it’s one of the hidden secrets in the social security law. So in the unlikely event that my husband’s ex – who is a bankruptcy lawyer who has presumably planned for her own retirement – ever collects against his social security earnings, I can, too, if it comes to that.)
  2. Each of us had children from previous marriages.  How did we plan to divide our assets fairly so that each of them was treated fairly? (Answer: Not so easy, as it turned out. His son has a family trust…mine did not. But we worked it out — I’m just glad that we thought about it before it was too late. The three “boys” — who are of course all grown up working professionals now — are friends, and I hope it always stays that way.)
  3. Were there any obligations, liens, judgments, or agreements in place that would affect our financial future together? (Answer: This one wasn’t so easy, either. Turns out neither of us knew of anything…but that didn’t mean something wasn’t out there, and it took awhile to figure out the answer.)
  4. How were we planning on handling any surprise requests for help or support from our adult children? (Answer: Again, a question without an easy answer. One of us came from a family where parents routinely subsidized adult children with credit card payments, interest-free “loans” that weren’t expected to be paid back, and so forth. The other did not, and we had different expectations here.)

Those might seem like the kinds of questions that would only affect wealthy couples — but they aren’t.  For instance, I have a friend who’d been married to her husband for 18 years when he died suddenly.  She thought that his life insurance policy would be more than enough to pay off the house and leave her a bit — but somehow he had forgotten (or at least failed to mention) that he’d signed a divorce decree that promised a $150,000 payment at the time of his death to a child from his first marriage. The payment was supposed to be funded by a life insurance policy that lapsed long before he died…but the payment was still owed. Since the divorce decree was a court order, the adult child placed a lien on her father’s estate and her money was taken out of the life insurance proceeds my friend was counting on, leaving her without enough to pay off the house.

I have a cousin who was an only child, and rightfully expected to receive his parent’s house, his mother’s possessions, and the substantial stock portfolio that his father amassed as one of the first employees at a giant technology company. Six months before his 86-year-old father’s death, however, he remarried — without changing his will. His new wife and her family immediately sued for a widow’s portion of the estate, and got a life interest in the house, the furnishings, and a large cash payout.  (This example applies to both the second wife — who in this case moved quickly to protect herself, and to anyone with a widowed parent.)

I’m not going to write a long post about all the horror stories I’ve heard, I’m just going to make the list of estate planning questions that could save someone else from the nightmare my friend went through.

Collect and Terminate Old Documents

Did you (or your spouse) have a will, a power of attorney, or a living will from your prior marriage?  You probably did.  Did you ever terminate it?  A divorce might not automatically terminate old “legal instruments”.   Nor does simply making a new will or power of attorney unless you include the specific legal language required in your state to replace older documents.

Make sure that you consult an attorney and understand exactly what it takes to remove your former spouse from your will, and any other legal documents where they were included.  Double and triple-check all insurance policies — including any they may own on your life — and make sure that the beneficiaries are changed.

Once you terminate the old wills and powers of attorney, immediately execute new ones. Who inherits your estate?  Your second spouse? Your children from a previous marriage, children from the current marriage, stepchildren, or some combination? Does the inheritance go to a trust or outright to the beneficiary? Who should have your power of attorney to act for you if you can’t act for yourself? Who should be the executor of your estate? Are there personal bequests that need to be spelled out?

Consider  an Estate Planning Pre-Nup

My husband and I didn’t enter into a full-blown pre-nuptial agreement before we married.  Neither of us was particularly wealthy, and we didn’t see the need for one.  We did, however, enter into an agreement specifically about estate planning.

This was important for us because his family had property that had been in the family for generations, oil & gas leases, and other assets that they wanted to insure passed only to his biologic offspring.

We also wanted to make sure, however, that we could divide assets earned during our marriage as we saw fit.

Many states have laws that specify how assets are to be distributed.  Some require a “marital share” for a surviving spouse.  An estate planning pre-nup can waive those rights or expand them.  Personally, I think putting this on the table and thoroughly discussing our options and choices was one of the best things we did before we got married. At the time, however, it was no fun at all.

Update Work-Related Documents

If you or your spouse to be is employed, one of the things you can’t overlook is updating the beneficiary designations for life insurance, pensions, IRA’s and 401 K’s handled through your employer.  I know more than one second wife who’s discovered that their husband forgot about an IRA or 401K account and saw a substantial amount of the inheritance that would otherwise have come to them go to adult children from a former marriage or even an ex-spouse because someone forgot to make the change.

Update Titles 

Bank accounts, stock accounts, and other assets aren’t always owned by the person or persons you think they are. You have to give significant consideration to the way you title or name assets. Do you want them to be jointly owned with your spouse? Are they community property, or separate property? Should they be in your name so you can give them to your children at death?

The Internet has made this especially important. When you set up your online brokerage account, did you list your mom as your beneficiary? Did you call it (even in jest) “Me and Johnny’s Travel Fund” (when “Johnny” is an ex boyfriend)? I know one woman who did just that: she started an online stock account with a former boyfriend, then totally forgot about it….until she realized that the 100 shares of Netflix stock she’d put in there on the day of the company’s IPO were now worth a small fortune thanks to growth and stock splits. And that her ex-boyfriend, whom she hadn’t seen in years, might still have the passwords and be able to access the account.

What if You Don’t Have Any Assets?

If you think that you don’t have any assets, you’re probably wrong. You have a lifetime of collectibles, furnishings, and “things” even if you don’t have a lot of money. And then there’s always the manner of your death. 

A school teacher I know was devastated when a milk truck driver had a heart attack, and then sped through a red light, killing the teacher’s wife and two daughters. As if that weren’t bad enough, when the milk company’s insurance company offered a multi-million dollar settlement, his wife’s estranged step-father and mother sued him, presenting a decades old will that named her mother the sole beneficiary of her estate.

I know someone else who hit a large jackpot in a Las Vegas casino — large for him, anyway — then walked down the Strip for breakfast with the check still in his pocket. He walked right into an armed robbery taking place at the restaurant, and was killed instantly. He had a long-standing “common law” wife who didn’t know that he hadn’t actually gotten a divorce from the spouse he’d left many years before. So one of them ended up with the cash…and the other ended up with the cost of bringing his body home and paying off the bills they’d run up together.

It may seem morbid to think of these things before you get married — or even when you and your spouse are both healthy and young enough that death seems far away.  But the truth is that you just don’t know what will happen, or when.  So plan ahead and save yourself a financial burden on top of grief!

Update: Our youngest adult son called a few weeks after this blog post originally appeared. Someone had tipped him off that I mentioned the family trust designed to benefit him and his cousins, without sharing with step-siblings or his father’s second wife (me). He wanted to know how “we had worked things out” regarding the trust, and I was glad to be able to reassure him that our solution was to purchase extra life insurance for me, so that his family’s assets pass to him on his father’s death with no claim on them from me or any creditor. I am glad he called; this is exactly the kind of issue that comes up in blended families, and should be clarified for all concerned parties. I don’t want anyone to be surprised — and that’s really the point of this blog post. Get organized while you’re alive, so that your family isn’t surprised once you’re gone.

Note: I am neither an attorney nor a financial advisor or planner. Nothing in this blog post should be considered as legal or financial advice. These tips come from personal experience. You should check with a competent attorney or trusted financial advisor about your personal situation.

Photo credit: Photographer Chris Barron made this photo available on Flickr under a Creative Commons License.

About debmcalister

I'm a Dallas-based marketing consultant and writer, who specializes in helping start-up technology companies grow. I write (books, articles, and blogs) about marketing, technology, and social media. This blog is about all of those -- and the funny ways in which they interesect with everyday life. It's also the place where I publish general articles on topics that interest me -- including commentary about the acting and film communities, since I have both a son and grandson who are performers.
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7 Responses to The Second Wife’s Guide to Estate Planning

  1. Trixie says:

    But what happens when a man who divorced a first wife ( and has no contact with his 3 adult children) 25 years ago and lives with second wife for the next 25, how are the adult children from first wife entitled to his money upon his death

    • debmcalister says:

      Hi, Trixie — Your email address looks Canadian, and I have no information or experience with Canadian inheritance laws. In the U.S., some states have laws that specify inheritance rules in the absence of a will, and the laws vary widely. Some specify that children are entitled to a certain portion of their parents estate. Others do not. So it’s important to seek legal counsel for your specific area.

      The main reason there are problems in a situation like the one you describe is when agreements about inheritance are made during a divorce, or in an old will. Years go by, the person forgets that there are old “legal instruments” out there, a death occurs, and the survivors are left to deal with the conflicting wills and the problems that arise from not having a clear will.

      The point of this blog post is to say that clearly discussing all the eventualities and understanding what legal liabilities and obligations might exist is crucial to avoiding problems in a blended family.

      Best of luck to you — sorry I can’t answer your specific question!

      Regards, Deb

  2. Chris Rocco says:

    Thanks! I typed in “2nd wife financial security” and your blog came up. We decided to go the “extra life insurance” for my fiance route. You were so right! Though they were not saying it, all my (1st wife’s) kids were all eying my loot and I know would have thrown #2 out on her ass if I died. Now, to do what needs to be done efficiently…!

    • debmcalister says:

      Hi, Chris — Kudos to you for protecting your wife and your children by planning things while your new bride is still a fiancee! Luckily, in most states wives have some rights to property gained during the marriage, so (most) second wives don’t actualy face the loss of their home. But it certainly can happy. I know that your bride will be glad you talked this stuff through before the wedding and took steps to protect all involved.

      Regards, Deb

      P.S. Congratulations on your upcoming wedding! I hope it is many, many years before your estate plan is called for!

  3. sarah says:

    I agree. No one thinks the second wife should get anything even though she cared for her spouse and home for many years. Very sad, selfish and greedy.

    • debmcalister says:

      Hi, Sarah —

      Often, it isn’t anyone’s intent that things get messy in a blended family. It’s just that people forget how complicated modern relationships can be, and make mistakes that cost someone dearly.

      Regards, Deb

  4. Sally says:

    Kind of ironic how everyone’s thinks the second wife does not count in some of the blogs. My dad is married to a very nice 2 wife for 45 years. Whatever he decides to do with there finances is his and his 2 nd wife’s choice not the kids!!!

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