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second marriage of parent and asset protection

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S

sss

Guest
State: Missouri

My father died, leaving a comfortable estate for my mother. My father wanted the assets they accumulated to remain within the family, but there are no legal arrangements about this. Her assets are presently in a revocable living trust.

She is now planning to remarry. She is 51, so there will be no children at issue with this new marriage to complicate things. My expectation is that the income from the estate will be available for her new marriage but that the estate, which is generating the income, will not be.

My mother says that she has no problem with this, but I'm very concerned about how her committment to this may change as there is nothing to keep her from deciding, down the road, that she wants to turn assets over to her new husband or to begin drawing down the estate assets for her new marriage. I realize that a prenuptial agreement is the way to handle concern about a claim the husband could make, but I'm wondering how she can keep control of her assets while ensuring that she can't do anything that would redirect those assets toward her new marriage. I want to both protect the expected inheritance of me and my brother, and make sure that if the marriage fails she will walk away from it with her assets and reasonable growth on those assets intact.

How would this normally be handled?

Is there a way that she can legally and irrevocably limit her ability to do certain things with the assets (such as giving them to her new husband or using them for her new life with him), while not relinquishing complete control over them? The more drastic step of an irrevocable trust is something I would rather avoid.

I suspect that the prenuptial agreement, especially since it can be freely revoked later, could not have the intended effect of limiting her ability to do the above things.

I need a proper direction to research this? I would like to be better educated before we all meet with the lawyers.

Thank You
 


ALawyer

Senior Member
At age 51 her life expectancy (assuming decent health) is about 35 years -- which is probably older than you are. And thus your "expectancy" is a long way from possible payoff. So your concern is a bit premature if not selfish.

If you want to protect HER, you are right in that she really should have a pre-marital agreement. The agreement should normally waive rights to claim a spousal share against her estate for at least 10 years.

But what is sauce for the gander is also source for the goose. Should she also waive? Probably.

But why should anything stop her from, years down the road, leaving something to him, or vice versa? Or spending it all if that's what they want. Or buying an annuity for their lives?
 
S

sss

Guest
Thank you for replying.
I'm sorry that you consider me selfish. I'm not sure how to approach this reply. Any way that I word it will probably only cause anger or annoyance, at best. Your reply ignored my question though. You apparently consider the question illegitimate and are disinclined to answer it because you feel my motives are corrupt. I will try to answer a few of the questions you asked (I realize they were meant to be rhetorical), in the hope that you will be willing to answer my original question.

To answer the last question first, what should keep her
from spending it all if that is what they want? My mother herself told me numerous times after my father died that he
wanted her to remarry, but that he did not want their estate to go to another man or marriage with another man. They discussed these things throughout their marriage, but his death was a surprise. He did not try to legally enforce anything like this with any trust arrangements.

Why, if there was agreement between them do I feel the need to have her legally commit in some way to protect all this? The simple answer is that her committments and attitudes will probably change in her new marriage.

I don't want to bore you with details, but perhaps if you have some sense of where I'm coming from it would overcome some qualms about answering my question. My father seemed to carry on the traditional idea that you should leave the generation after you better off than you were. I'm of the same frame of mind. I don't view my assets(I have enough that this remark isn't just hot air) as simply mine to do with as I choose, but view them as belonging to my family and consider myself the caretaker of what I have. I will eventually pass my assets to my brother's descendants.
I know that most people think one should simply spend what one has rather than worrying about passing on something to the next generation. I don't subscribe to that view. I don't believe my father did, nor my grandparents.

My question was specifically about the assets that my father left my mother(which, by the way, are generating the bulk of her income, that is, if the assets diminish her income will diminish with them). I am not trying to have any influence over what she decides to do with her income, nor with what they choose to do with assets that they accumulate in their new marriage. If she wants to leave everything that she and her new husband have together to him, I'm not going to argue with that.
I am speaking only of the primary assets from her previous marriage with my father.
For the reasons pertaining to my father, my own selfishness, and the protection of her own economic welfare(which is presently based on these assets and which would be entirely again if this marriage doesn't last the remainder of her life; furthermore the assets will be the source of half of the marital income for her new marriage) I would like to be assured that the estate will remain intact. I don't really understand why this is considered so unreasonable.

If I understand your comment about her waiving as well, you mean that she should be willing to sign a prenup waiving claim to his pre-marital assets. This will be done.

By now you probably think I'm completely full of $&*@, but I'm asking again for some reply. Is there a way for her to irrevocably waive certain options as to what she can do with the assets from her previous marriage, while otherwise retaining full control of those assets?

Thank You
 

ALawyer

Senior Member
First I did not say you were selfish, but only that it might appear that you were, and not to me, but to your mother. (I've "been there".)

Second I truly share your concern any time there is a second marriage that a party might get snookered and taken to the cleaners. I strongly believe in pre-nups to protect the parties. And I beleive that the parties should, after the marriage, keep their the vast majority of their pre-marriage assets completely separate, even beyond the time they know if the marriage will "work out".

But I do depart from you on trying to exert any long term influence to get a parent going into a marriage to tie up his or her assets forever to assure that no matter what, regardless of the life circumstances, life expectancy, etc. that they must to a child. I can assure you that I have seen many cases that backfire when children try to do that after the death of a parent; it often sours a wonderful relationship and is counter-productive.

Who one choses to get one's money at death, including assets accumulated during a first marriage, usually depends on lots of factors, including

1. the needs of each of the objects of one's natural affection, with kids and grandkids very high up on the list.

2. the nature and quality of the contact one has with theose natural objects of affection -- such as one's kids and grandkids. (You can read on this board some horror stories of estranged families at war, and I would never regard the mere fact that someone is a relative as sufficient to entitle one to assets.)

3. the needs of others for whom one is concerned about, which may include other relatives, one's school, church, favorite charities, etc.

4. the amount involved, and tax consequences.

To answer your first comment, I am sure your father "did not want their estate to go to another man". The fact that "he did not try to legally enforce anything like this with any trust arrangements" may relate to the fact he likely could not have done so (at least not fully -- spouses can typically elect against the estate) or he was wise and knew that trying to do so would be insulting, demeaning, suggesting he did not respect your mother's good judgment and sense of what is right, and that in time things change and he trusted her to make the proper decisions. But I don't see any "agreement between them", and certainly not one that you can enforce.

You are probably right in that she probably would not want to have to "legally commit in some way" to protect you and I agree with you that in time her attitudes probably will change in her new marriage, and beyond that, I think they probably should change. If in the next 20-30 years you become (and I hope you do) extremely successful financially and really set, but you and your spouse treat your mother poorly, and at the same time the new husband is wonderful to her, but has some financial reversals or health problems, shouldn't she be able to care for him with the "money from the first marriage"? And quite frankly, I have seen this happen, what if you marry a person who is horrible to her, or younger family members die before her?

"The primary assets from her previous marriage with [your] father" are now hers. I suggest that your concern, should be for "the protection of her own economic welfare (which is presently based on these assets". That we can all understand. And she will not regard you as selfish for seeking to protect her. But forever, so they must go to you? Come on now.

If you are asking can a lawyer devise an irrevocable trust for her to place all her "first marriage assets" in trust and totally relinquish the right to spend them down as she chooses (at least without some third party's approval), regardless of her needs, her relationship with the heirs she names, and regardless of future economic consequences (depression, fall in protfolio value, hyper-inflation, etc.) and have to stick with the income only for the rest of her life" the answer is yes. But I warn you and her, that this may have horrible consequences for her, on your relationship with her, and on her relationship with her new husband. I'd not try it. Because just when you think you figured it out, if the new husband is a bad actor, with her "otherwise full control of those assets" I promise you that she could get around anything. For example she could change the asset mix to something that is good short term for high income but a lousy long term investment, or invest in his business so he could draw a salary and spend the asset down.

 

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