The New Triangle Drama: Remarriage, Kids, and Inheritance

by Stacy Francis, CFP®, CDFA

It is rare that anyone cries in my office, but it did happen last week. A client reported between sobs that her dad had passed on a while back. Not only was she paralyzed with grief; she had also just learned that she wouldn’t get a dime out of his estate. It was all going to the twenty-years-younger woman he married three years ago. It felt, in her words, like a slap in the face. 

A sad story indeed, and more common than I think anyone would like. With an increasing number of people remarrying late in life, conflicts with children are on the rise – not just on a personal level, but financially, too. Unfortunately (and perhaps surprisingly), kids have very few rights in these scenarios. While it takes very little for a parent to disinherit a child, most states require that a surviving spouse receive between a third and half of the estate, at least (referred to as the elective share).

Sure, my client could make a court case out of it. Children often gain the jury’s sympathy in inheritance disputes. Unfortunately, the law is on the surviving spouse’s side.

The good news is: if you plan ahead, you can nip this ugly scenario in the bud and ensure that bereavement is the only reason your children cry at your funeral. Below are just a few ideas: 

  1. Skip the wedding altogether. Many couples who meet late in life opt to just live together, keeping assets separate and making life a lot easier for their respective children.

  2. Draft a detailed prenup. It may not be the most romantic thing to do, but it can make all the difference later on.

  3. Set up a Q-Tip trust. Q-Tip trusts are designed for this very purpose. When the parent passes on, the surviving spouse receives the income from the trust while the children hold on to the principal. Once the surviving spouse kicks the bucket, everything in the trust is paid out to the children. While Q-Tip trusts have their advantages, they can also create a lot of conflict- especially if the surviving spouse is young with a long life expectancy. Furthermore, setup costs can be substantial.

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