Is is possible for Amy, married to Bob, to set up some legal instrument that will prevent Bob, after Amy’s death, from passing on to any subsequent spouse (Carol) the nest-egg that Amy and Bob accumulated together, and instead assure that some portion of it goes to Amy’s (pre-Bob) children?
Amy wants Bob to have access to all of the nest-egg as long as he’s single and his will leaves everything to Amy’s children. But she doesn’t want a theoretical Carol get her clutches into Bob and inherit it, thus preventing Amy’s kids from getting any part of the money she worked for.
Amy loves Bob, and she doesn’t want to simply give the kids half of the nest-egg when she dies. He may need it. But she doesn’t want to rely on trusting Bob to follow her instructions after she’s gone. After all, you know what a temptress Carol is.
I know you’re not my lawyer and I’m not your client.
(I’ll explain the complicated circumstances that raised this question in a later post, if anyone’s interested.)
Assuming she has her own separate interest in the nest egg (which I’m not sure about), she could put “her” money in trust for her husband while he is unmarried, and then the children could be beneficiaries if he married.
Well, Amy could set up a trust of some kind, with income to be regularly distributed to Bob and to specific named children, but if the “nest egg” is a marital asset, then she’ll likely need Bob’s agreement to put aside a chunk of it (most of it? all of it?) for this purpose.
Amy really needs to talk to an actual lawyer who specializes in estate planning.
Trusts can be set up with all sorts of provisions for all sorts of purposes.
Protecting the inheritance of children of a first marriage from greedy potential later spouses is a bog standard concern that is well addressed in standard trust practice. Depending on how much of Amy & Bob’s money is his, hers, or joint, Bob may or may not need to have much input into the arrangements.
Better if everyone is happy with the set-up, since Amy won’t be around to insist, but there are ways, including having Bob not be the trustee, of ensuring that future Bob can’t go rogue even if he wants to.
Of course Bob has the same challenge if he dies first and is worried that future Amy will value her new spouse more than their joint kids.
Add in children from a blended family and there are all sorts of permutations of love, hate, jealousy and greed. A trust can handle all of them if the people can decide what they want.
A good trust attorney can identify all these issues and talk Amy and Bob through them. Then write the docs to do what they want.
My brother-in-law’s mother did something similar. She set up a trust fund for her son (BIL) and daughter, but she put in a clause that if the daughter ever remarried (she was widowed at a young age) she would forfeit her share of the trust. I don’t know how long that clause was supposed to last, but the daughter was still bitching about being bound by it when she was nearly 80.
Strikes me as an unreasonable restraint on marriage, meaning that even if one could put together the words on a Trust to make it so, it should be void for public policy reasons. But maybe it avoids that by letting Bob still benefit from the Trust regardless, and then just limiting what he can use the money for? IDK…
Note that setting up a trust and hiring people to administer it is going to cost a significant amount of money–so it would only be worth it if the amount of money in question is sizable.
@Kent_Clark’s BIL’s Mom sounds like a real piece of work.
OTOH, doing things like ensuring your adult kids from your first marriage can’t be disinherited by your current (second) spouse if you die before second spouse dies is pretty standard.
I’ve known a few people with family money who have done this. It’s not particularly complicated. You leave your estate to a trust. The trust provides for the surviving spouse (and children) until her remarriage (or death) and then is either distributed to the children (or to new trusts for their benefit) or back to the original family, in some fashion. It can get tricky to implement (especially with children), but I think it’s a familiar concept.
What stops Bob from taking all the money out of the trust before he remarries?
There will be a trustee. If you don’t trust Bob to be the trustee, there are many law firms and financial institutions that provide professional trustee services. It costs money, of course, but the trustee is then obligated to administer the assets consistent with the terms of the trust.
Your real issue is the ideas that this is involves Amy and Bob’s “nest-egg” that was “accumulated together.” A lot of their jointly-held assets will become Bob’s by operation of law and some portion of the “nest-egg” is going to be Bob’s. It works more simply if you’re dealing with separate pre-martial assets (or inheritances and the like) that have been kept separate.
But as to truly joint assets, be that real property or financial accounts, there are still work-arounds. If both are amenable they can do an organized pre-partition of their assets.
Take that joint brokerage account you have together and agree to open two separate ones each titled only in one name and move half the assets to each, then close the joint one. etc. for each joint asset. In community property states this may be ineffective, but those states are a minority in the USA.
There are definitely tax inefficiencies attached to doing this. But it can be a way to arrive at where they’re going.
For sure all this is easier if they each have material separate assets. Note that as a matter of law, IRAs & 401Ks are always separate assets. There is no such thing as a joint IRA or 401k. Often spouses name each other as the post-death beneficiary of their IRAs and 401ks. But they don’t have to. Nothing prevents a parent from naming their kids, or a trust, or their next door neighbor’s dog, as the beneficiary of their retirement assets.
Again there are tax consequences for doing this and generally naming your spouse is the most tax-efficient option. But if going for tax efficiency means just that much more money is available for somebody to misdirect contrary to your wishes, then screw the incremental taxes and set your beneficiaries to accomplish your goals.
Got a cite for that? An estate attorney shouldn’t charge much to set it up (~$2500?), and she could name the children as trustees to act for free. Sure, she could hire a full time trustee, and those can charge large portions of the assets (~0.5%/year), but I don’t see a need unless the assets really are considerable.
My aunt and uncle (now deceased) wanted to do something sorta like this. They loved their two daughters (and three grandkids), but despised both of their husbands. They wanted to find a way to pass their inheritances on to the daughters, but keep the money away from the husbands. To my limited knowledge, and what I told them, was that wasn’t going to be possible, unless the daughters got divorced. Their scheme was to somehow leave the inheritance to the grandkids, but somehow name the grandkids’ mothers as executors or beneficiaries or something, thereby leaving the husbands out of the proceeds. I dont know what came to be after they died as I lost touch with everybody.
Thanks. I was wondering about that, too. My mother-in-law put her house in a trust for her son and daughter (my wife) so that if she had to go into a nursing home, the family could keep the house. We didn’t get the impression it cost that much to set up, and as far as we know there are no ongoing costs involved.
I don’t understand why people think this is possible. My mother can do all sorts of things if she despises my husband - she can leave me nothing, she can make me the beneficiary of a trust that pays me a certain amount per month/year and leave my kids the remainder when I die. But there’s no way it’s possible to keep me from using the money to renovate the house my husband and I jointly own or keep my kids from paying for their father to go on vacation.
Same for the situation in the OP - it’s possible to keep Bob from leaving Carol the actual account(s) that hold the money but it’s not possible to keep him from spending the money on her unless he gets skipped all together. In which case the children can still give Bob money which he spends on Carol. You can only control so much from the grave.
I am interested in the circumstances that raised the question.
It depends on how it is structured and Bob’s role in the trust but the trust is basically its own thing, managed by the “trustee”, independent on whether Amy is alive or not. IOW, the assets are legally in the trust’s name. So Bob can only take out what money he is entitled to as a beneficiary of the trust.
I am with you. When I got home from that visit I shared the discussion with my wife and I came to the conclusion they were just petty nincompoops. If you want to share something with your family after you are gone, just go ahead and do it (and tell everyone), but ISTM the scheme they were planning was just going to cause strife and division within the two daughters’ families (maybe that is what they had in mind). It’s like they were laying a bomb to go off after they were gone. Who GAS if the husbands benefit a little after you are gone, and in the case of the OP, it’s just weird that a spouse would try to manipulate the future of the other spouse in that way after they are gone. WTF is wrong with people?
My wife has twice been screwed by a second spouse.
Her grandmother’s last husband married her in his fifties, never having been married before. For that reason, she assumed that he would not remarry after her death, and left him everything. But he married a woman with a son who had drug problems and sold or gave away many precious family heirlooms that my wife and her family expected to inherit. Grammee expected him to take care of her descendants, but he didn’t after the new wife showed up.
My wife’s father remarried after divorcing her mother, and had a second set of kids, and the evil stepmother has long been jealous of the first family. In the years before his death a couple of years ago, she discouraged or prevented him from staying in touch with my wife and her brother. We believe that he had dementia in the last few years and strongly suspect that she altered his will to cut out the first wife and kids in favor of her own. This includes not only property with sentimental value, but also cash, since his net worth was probably in the millions at his death (former ambassador).
So questions like my theoretical have arisen when we’re making out our wills. Thanks to the suggestions made here, we’re going to see the fellow who drew up the trust for our house.
Although I offered to explain the circumstances (perhaps I shouldn’t have), I want to assure my fellow Dopers that my marriage is rock solid, and I’m not looking for or interested in any commentary or speculation about my relationship with my wife.
That’s an awfully big assumption. If Grammee wanted to leave heirlooms to her descendants then she should have or would have done that. They aren’t really earning assets that her husband could have used to supplement his income until they would have been passed on.
Wills are very contentious especially with large families even when there’s not a lot of money or valuable assets involved. Heirs normally expect to be treated fairly and or get their share…but that’s not how it works. The last wishes documented by the deceased in the form of a legal document are what rules, no matter how certain heirs believe they were treated unfairly.
Totally agree that you and your spouse should clearly lay out your wishes with regard to the disposition of your assets.