One of the most common assumptions I hear from clients is that if they leave everything to their spouse, everything will go to their children when their spouse passes. If you and your spouse share the same children and your spouse does not remarry or become romantically involved with another person, there is a good possibility this will still occur. However, we know from studies like this one that remarriage after death is very common, with widowed men remarrying close to five times more than women. It’s an unsavory scenario to imagine, and a difficult topic to broach with your partner, but not considering it could leave your intended beneficiaries unintentionally disinherited one day.
Here is the typical scenario: A married couple leaves all of their assets to one another in an estate planning instrument or jointly with rights of survivorship. When the first spouse dies, everything passes outright to the surviving spouse, either under the terms of a Last Will and Testament or outside of probate by operation of law. At that point, the surviving spouse owns the assets completely. Then, life moves on, and so does the surviving spouse. Down the line, the surviving spouse remarries. Sometimes estate planning documents are updated. Sometimes they are not. Then the surviving spouse dies first in that second marriage.
Now, it’s possible that everything, including the assets originally inherited from the first spouse, may pass to the new spouse. If there is no plan in place to address this common occurrence, those assets may then pass to the new spouse, and then the new spouse’s beneficiaries, under that spouse’s estate plan or by the current intestacy laws in place in the South Carolina Probate Code. The result is that the original children receive nothing, and the assets end up in the hands of someone the first spouse never intended to benefit. It’s a scenario we’ve seen play out time and time again.
But the problem is not bad intent; it’s simply a lack of proper planning. When you leave assets outright to a spouse, you give up all control over what happens after your death. Those assets become the spouse’s property in every legal sense. Remarriage, changes in family relationships, or outside influence can all be factors that lead to accidental, and sometimes intentional, disinheritance that you wouldn’t have expected. If a plan depends on everything working out as anticipated, you are leaving a lot up to chance.
So, how do you plan? Is a Last Will and Testament alone enough? A properly drafted Last Will and Testament is an document in every estate plan. However, a Last Will and Testament that leaves everything outright to a spouse with no stipulations does not address what happens after the spouse’s death. It controls the distribution of your probate estate at your death, however, without the proper provisions, it does not control how a surviving spouse later disposes of those assets. That gap is where unintentional disinheritance can occur. The planning solution here is a Qualified Terminable Interest Property “QTIP” Trust.
If the goal is to provide for a spouse while also protecting the children’s inheritance, a QTIP Trust is one of the most effective tools available. With this type of trust, assets are not distributed outright to the surviving spouse. Instead, they are held in trust for the spouse’s benefit. The surviving spouse typically has the right to receive income and, depending on how the trust is drafted, may have access to principal for health, education, maintenance, and support. However, the surviving spouse does not have the authority to decide who ultimately receives the remaining assets. At the spouse’s death, the remaining trust assets pass to the beneficiaries designated by the first spouse. This approach allows you to provide for your spouse while they are living while also maintaining control over the final distribution of your assets.
This type of planning is particularly important in second marriages or blended family situations, but it is not limited to those cases. It should be considered any time there is a desire to ensure that children or other intended beneficiaries ultimately receive specific assets, regardless of future changes in circumstances. The bottom line is that unintentional disinheritance is not the result of poor decisions, it is usually the result of incomplete planning. If your current plan is to leave everything to your spouse, the key question is what happens after your spouse is gone. If there is no clear answer, your plan likely needs further attention.
Estate planning is fact specific, and small changes can have a significant impact on the outcome. If you want to ensure that your plan provides for your spouse and also protects your intended beneficiaries, it is worth taking the time to review your options and put the appropriate structure in place.
If you are in need of assistance, the attorneys at Collins Family & Elder Law Group can help.
