In California, a community property state, a resident can bequeath 100% of their separate property assets and half of their community property assets. A resident may only bequeath the entirety of a community property asset to someone other than their spouse with their spouse’s consent or acquiescence. This can be extremely important to those in second marriages with prior children.
Wealth Advisor’s recent article titled “Estate planning for second marriages” asks: does the individual’s (the testator) spouse even need support? If they don’t, a testator typically leaves his or her separate property assets directly to his or her own children. However, because the surviving spouse is an heir of the testator, their Trust must acknowledge the marriage and say that the spouse is not inheriting. Otherwise, the surviving spouse as heir may be entitled either to a one-half or one-third share in the testator’s separate property, along with all of the couple’s community property assets. The surviving spouse would inherit if the testator died intestate (with no Will), or if they passed with an outdated Will that they signed before the marriage that left out the current spouse.
If the spouse needs support, consider the assets and family relationships. Determine if the assets are the surviving spouse’s separate property from prior to marriage or from inheritance while married. It is also important to know if the testator’s spouse and children get along and whether it’s possible for the beneficiaries to inherit separate assets. If the testator’s surviving spouse and children aren’t on good terms and/or are close in age, and if it’s possible for separate assets to go to each party, perhaps they should inherit separate assets outright and part company. If not, it can get heated and complicated quickly. For example, the testator’s house could be left to their children and a retirement plan goes to the testator’s spouse.
If that type of set-up doesn’t work, a testator might consider making the spouse a lifetime beneficiary of a Trust that owns some or all of an individual’s assets. A Trust requires careful drafting, so work with an experienced estate planning attorney.
Next, determine if the children need support, and if so, what kind of support, such as Supplemental Security Income. Also think about whether the children can manage an outright inheritance or if a Special Needs Trust or a Support Trust is required.
This just scratches the surface of this complex topic. Talk to an experienced estate planning attorney about your specific situation.
Reference: Wealth Advisor (Feb. 23, 2021) “Estate planning for second marriages”