by Legacy Plan Nov 8th, 2016
Summary: Almost everyone has a high need for an estate plan. For some groups of people, this need is especially high. One of these groups is people who have blended families. If you have remarried but have children from a previous marriage or relationship, a well-crafted and executed estate plan can allow you to take control and leave the legacy you want for each of the loved ones in your life, as opposed to leaving the determination of these distributions to the prefabricated solutions of your state’s statutes.
Planning With a Revocable Living Trust
Today, many older individuals have blended families. Whether you are a widow/widower or a divorcee, it is not uncommon to find a new partner and decide to marry that person. If you are a part of one of these ever-more-common families,
your estate plan can offer you very substantial benefits. Without a plan, your legacy may be determined by your state’s statutory laws, such as the intestacy laws and the spousal share laws. With a properly constructed plan, you
can be in control.
A case decided by the Kansas courts earlier this year offer a clear example. Charles Cross married his first wife and had three children with her. In 1983, he married his second wife, Marilyn. In 1992, the husband created an estate
plan. His will stated that, upon his death, Marilyn got the couple’s home, along with their furniture, jewelry, houshold items and personal effects. The will also gave Marilyn any autos the couple possessed. Everything else went
to the man’s three sons.
Cross didn’t stop there, though. He named the wife as his death beneficiary on his life insurance and his IRA. He also created a revocable trust. The trust’s income went to Charles during his lifetime, then (after his death) to Marilyn
during her lifetime and the remaining accrued income to Marilyn’s estate upon her death. The husband’s estate plan went one step further. The husband secured Marilyn’s signature on a document that officially announced that she
declined her legal right to take her statutory spousal share of his assets, instead electing to receive the distribution laid out in the husband’s plan. (In Kansas, as with all states, a surviving spouse generally has the legal
right to choose to receive the distribution established in the deceased spouse’s estate plan or else to take a specific portion of the deceased spouse’s wealth that is defined in the statutes; however, a spouse can create a written
document that waives the right of receiving the spousal statutory share, as Marilyn did in this case.)
After the husband died, the wife tried to challenge his plan. She argued that, because Kansas changed it spousal statutory share laws after she signed her document waiving her spousal share rights, she should not be bound by that document.
The courts ruled against her. When she signed the wiaver document, she knew that her husband’s plan left her with the income from the trust, the life insurance benefits, the retirement account benefits and the property listed in
the will. She also knew that, by signing, she was accepting the distribution Charles created in his plan, and declining any distribution created by Kansas’s spousal share laws. Because she signed the document voluntarily and knowingly,
she had no basis to ask the court not to enforce the agreement. The wife’s challenge failed and the husband’s plan was carried out as written.
In many situations, court cases involving estate planning tend to track a circumstance where the deceased person didn’t plan, or didn’t plan properly, and things went very wrong as a result. In this man’s case, the opposite was true: he engaged
in very extensive, detailed planning and, when the court case was over, his plan functioned as intended. Cross’s plan is a prime example of how engaging in planning, especially detailed planning that goes beyond simply creating a cookie-cutter
will, can give you and your family immense benefits.
This article is published by the Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with
an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services-company and is not a lawyer or law firm and is not engaged in the practice of
law. For more information about this and other estate planning matters visit our website at www.legacyassuranceplan.com.