How to provide for your child after you re-marry

Dear Len & Rosie,

I divorced my first husband fourteen years ago. I have one child from this marriage, my daughter, who is now sixteen years old. Eight years ago, I married a second time. My second husband has been the primary earner during our marriage. Most of what we own was paid for by him, not me. If I were to die before him, what claim would my daughter have against assets my husband and I have accumulated?

Terri

Dear Terri,

What do you suppose would happen if you died first, and everything you and your husband owned was titled in joint tenancy, except for your retirement accounts and insurance policies, and you named each other as beneficiaries for those? The answer is that your husband would own everything, and he wouldn’t be under any legal obligation to leave any of it to your daughter upon his death. And by the time he dies he may not like her very much. Already your daughter, his once precocious 8-year-old step-child, has transmogrified into a rebellious 16-year-old.

You have the right to dispose of your separate property and your half of the community property as you wish upon your death. You don’t have to leave it to your husband, even if he paid for it all out of his earnings. His earnings during your marriage are community property and half owned by you, unless you signed a valid prenuptial agreement that says otherwise.

So how do you do it? One way is to make sure that you and your husband do not own anything in joint tenancy. You can divide up your accounts, and sign a deed severing the joint tenancy to your home. Then you can make a will that leaves your assets to your daughter upon your death. You could also provide in a will that your half of the property be held for the benefit of your husband until his death in a trust designed to insure that your daughter will wind up inheriting your assets on the surviving spouse’s death.

But that could easily backfire. Imagine your husband’s perspective. He paid for most of what you own, and you’re taking half of it away from him? There’s another word for doing just that: Divorce. Marriages have broken up over this sort of estate planning.

There’s a better way. You and your husband can sit down and have a discussion and come up with a deal. The two of you can enter into a binding agreement to devise property - a contract to make a will. You can promise to leave everything to one another, or almost everything, and also promise that on the survivor’s death your daughter will get it all, or at least her fair share if your husband has children of his own he wants to protect.

Len & Rosie

How Adoption Affects Inheritance

Dear Len & Rosie,

My recently deceased brother had a daughter thirty years ago. He and his wife divorced within her first year of her life. Apparently, my brother’s daughter was adopted by her mother’s second husband after she remarried.  Would this daughter be legally entitled to any part of my brother’s estate or his trust? My brother had a living trust and didn’t want to leave anything to her, but the trust didn’t specifically name her and exclude her from an inheritance. Instead, the trust says, “I have purposefully omitted any other relatives from any and all distributions.” Is this a problem?

Nancy

Dear Nancy,

When we meet an estate planning client, the first thing we do is to talk about the client’s family. How many children and grandchildren are there? Are there any deceased or disabled children? Are there children our client has adopted, or children who’ve been adopted away? It’s also a subtle way to quiz a client’s mental capacity. It’s a good sign when a client knows the names and ages of all seven of her grandchildren.

If our client wishes to disinherit a child, we like to include language such as “The settlor has intentionally and with full knowledge of the consequences made no provision for the settlor’s daughter, Nancy, or her issue.” (Issue is a legal term that means “descendents.”) From what you’re telling us, it looks like your brother’s attorney may not have been that thorough.

Fortunately, the law is somewhat forgiving. Your niece will always be the biological daughter of your brother, but if she was adopted by her step-father, she’s no longer legally related to you or your brother. She’s not entitled to notice of the existence of your brother’s trust, or notice of a probate. She also does not inherit anything from your brother’s trust or probate estate unless the trust or will names her as a beneficiary.

Unless you have proof of the adoption, the successor trustee of your brother’s trust should provide your niece (or ex-niece) notice of the existence of the trust under Probate Code section 16061.7. Play it safe.

If she was never adopted away from your brother, she’s still not entitled to inherit anything if your brother’s will and trust left everything to others. The only time a child is automatically cut into an estate plan is if the trust or will fails to dispose of everything, or if the child was born after the trust or will was created.

So why name children and specifically disinherit them when it strictly isn’t necessary? It makes the client’s intentions clear. It’s harder to prove a man didn’t know he was disinheriting a daughter when his initials are next to a paragraph saying so in clear unambiguous language.

Len & Rosie