For many people, divorce can create unprecedented change. Even if you’ve already thought decades ahead, investing in your retirement and creating an ironclad estate plan, parting ways with a former spouse and remarrying can cause complications that aren’t always easy to understand or anticipate. In a worst-case scenario, an outdated estate plan could lead to your own children losing the inheritance you’d always wanted them to have.
You don’t have to take chances with your legacy. Here, the estate planning attorneys at Landskind & Ricaforte Law Group, P.C. discuss estate plans for blended families and how to protect your children.
The Risk of Leaving Your Estate Unprotected
If you’ve divorced and remarried, you likely expect your current spouse to honor your estate plan. However, even if you’re confident that your partner would respect your last wishes, New York law can make it difficult to ensure that children from another marriage receive a full and fair inheritance.
In New York, a surviving spouse is almost always entitled to an “elective share” of your estate assets—even if you both reached another agreement or your last will and testament designates your biological children as your sole heirs.
The size of an elective share depends on your estate's value. For example:
- If your estate is worth $50,000 or less, your surviving spouse is typically entitled to the entirety of your estate.
- If your estate is worth $50,000 or more, your surviving spouse is entitled to the first $50,000 or one-third of the estate, whichever is greater.
- If you own cash accounts or a motor vehicle, your spouse may be able to inherit both, irrespective of what you have or haven’t written in your will.
5 Strategies to Protect Your Children’s Right to an Inheritance
State law gives surviving spouses a right to an elective share, but they aren’t obligated to claim an inheritance. However, even if your spouse doesn’t claim their elective share, there’s always a chance that other events—events outside your spouse’s control—could prevent them from fulfilling whichever promises they made and intended to keep. You may need to account for the possibility that:
- Your spouse’s children could fight for a larger inheritance by filing frivolous probate lawsuits or putting pressure on their parent.
- Your spouse may have a hard time saying “no” to an adult child who’s struggling financially and asks for help.
- Your spouse could pass away when you’re still in probate or become incapacitated later in life, making it practically impossible for them to uphold any inheritance promises made to you and your children.
You can’t account for every scenario imaginable, but you can leverage your estate plan to protect your legacy and ensure that your children receive everything you’d wanted them to have. Some of the most common strategies for protecting an inheritance include the following:
1. Sign a Prenuptial or Postnuptial Agreement
Almost everyone who gets married plans to stay with their partner for life. However, divorce rates have only just begun to decline—meaning that a significant percentage of remarried couples will eventually part ways. Even if your marriage succeeds and prospers, inheritance-related disputes can still take a toll on your estate.
Depending on your family circumstances, you may wish to consider:
- A prenuptial agreement, signed before marriage, that protects your premarital assets from later divorce proceedings
- A postnuptial agreement/contract, signed after marriage, determining the distribution of assets if you divorce later
Pre- and postnuptial agreements provide a layer of security against divorce, helping to ensure that you retain control of your premarital estate assets even if you end up separating.
2. Purchase a Life Insurance Policy
Life insurance benefits, including death benefits, are usually exempt from probate. Policies come with different terms and benefit amounts, but coverage can be used to close inheritance gaps and guarantee financial security for your surviving spouse or children.
3. Revise Your Beneficiary Designations
If you’ve been married before, you likely made a wide range of joint financial decisions with your former spouse. You may have:
- Opened a joint bank account
- Named your former spouse as a beneficiary for a life insurance policy
- Named your former spouse as a beneficiary for a retirement savings account, investment portfolio, or other financial asset
Most of those decisions won’t impact your children’s inheritance, but some have the potential to cause major complications. Since beneficiary designations take precedence over the terms of your last will and testament, any unchanged designations will be enforced as written, even if it means ceding death benefits and bank accounts to your ex.
4. Push Back on Probate
Probate is the formal process of dissolving and redistributing a deceased person’s estate.
During probate:
- Your estate executor must prove that your last will and testament is valid.
- Your creditors will have a chance to file claims against your estate.
- Your estate must resolve any contests or lawsuits filed against it before inheritances can be distributed to your heirs.
During probate, anyone with a stake in your estate—from your spouse and children to creditors—can raise concerns about the terms of their inheritance. However, probate doesn’t have to be an inevitability. Landskind & Ricaforte Law Group, P.C. could help you keep your assets out of court and insulated from unfair claims.
5. Establish a Trust for Your Children
You can use a revocable living trust or other type of trust to:
- Protect your estate assets from creditor claims
- Provide clearly defined inheritances for different family members
- Keep your home, bank accounts, and other investments out of probate
You can also use a trust to place stringent conditions on the distribution and use of estate assets. For example, you may be able to stipulate that your successor trustee only release funds for an heir’s education, maintenance, or housing costs. You can also instruct your successor trustee to disburse funds only after a beneficiary has reached a certain age or graduated from college.