Advising Clients About Late Second Marriages
Tying the Knot? Or Just Moving In?
By Bob Mason
When a client tells me that he or she is considering a second marriage, for terribly unromantic reasons (I guess I’m the anti-cupid...darn lawyer!) I recommend that the client plan carefully—very carefully—before going into a later-in-life second marriage. The religious prescription not to enter a marriage “unadvisedly or lightly” applies in spades to a later marriage.
“Bob,” the client may ask, “are you suggesting we see an attorney before the preacher?” And I would answer: “Yes.”
Some of the biggest and most expensive messes (I like the term “elder law train wreck”) I have had to clean up have been after the death of a second spouse when there was little or no advance planning.
Adult step-siblings (who may not even know or like each other) can be counted on to fight for whatever it is that they believe their natural parents accumulated for them.
Most of the “planning” that I have seen is a simple verbal agreement that “what is yours is yours, and what is mine is mine.” Lawyers know that won’t cut it. All couples are different, but here is a partial list of issues that may be important.
The worst plan might be simple “I love you wills” that leave everything to the surviving spouse with the understanding that she will “do the right thing.” Even with wills that leave everything to the children of the deceased spouse, there may be problems with an elective share statute.
North Carolina has a mean elective share statute. The elective share statute enables a surviving spouse to “elect” a share of around 1/3 of the deceased spouse’s estate if he or she does not like what was left in a will.
In fact, one South Carolina case (testing a statute comparable to NC’s) made waves a few years ago:
The deceased founder of Hooters (you know...the restaurant famous for...large burgers and chicken wings) left $1 million a year for 20 years to his fairly younger surviving spouse. She felt $20 mil wasn’t enough, so she elected for 1/3 of Mr. Hooter’s estate. Mr. Hooter’s son (not the widow Hooter’s son, by the way) objected and claimed the South Carolina elective share statute (which is very similar to North Carolina’s) is unconstitutional. Yours truly believes that argument had as much chance as a Hoot Owl in, well, Horry County. Hooter Jr. and the widow Hooter settled for an undisclosed sum.
Those sorts of difficulties can be addressed in a prenuptial (or premarital) agreement.
The Family Home
Naturally the newlyweds do not want to see the bride or groom evicted upon the death of the other. On the other hand, children can become quite emotional over what may be perceived as “their home.” Chances are, putting the house in both spouses’ names is not a good idea. Read this for a very scary story (based on Mason Law facts). Advise a life estate, or maybe a trust.
Social Security Benefits
Remarriage can affect the Social Security benefits a newlywed was receiving under a deceased or divorced spouse’s account. If a divorce happens after ten years or more of marriage, a spouse can collect retirement benefits on the former spouse’s Social Security record if he or she is at least age 62 and if the former spouse is entitled to or receiving benefits. If a client remarries before age 60, however, he or she generally cannot collect benefits on a former spouse’s record unless the later marriage ends (whether by death, divorce, or annulment).
Annuities and Survivors Pension Payments
Your client may be kissing a hefty survivor’s pension (corporate or military) goodbye when he or she kisses a new spouse. Advise checking those out before heading to the altar.
There may be some tax planning advantages to marrying if estate taxes are a concern because many planning techniques are available to married couples only. Income taxes might also drop if one spouse is earning significantly more than his or her new spouse. On the other hand, many income tax breaks phase out for couples at less than twice the phase-out level for a single person.
Long Term Care (Nursing Home) or Medicaid Planning
This is a big consideration for older people considering remarriage. Medicaid rules and regulations do not care at all what sorts of plans or promises a couple has made when it comes to Medicaid and nursing home benefits. A carefully drafted prenuptial agreement is worthless. All Medicaid programs consider the combined assets of the couple. While rare, some couples have divorced within a few years of marriage when one spouse in declining health (usually the “poorer” spouse) has entered a nursing home.
It may be sad to see, but some couples are electing to do exactly what they would have DIED seeing their children do 30 years ago...”living in sin.”
Filed Under: General News