Protecting Your Children’s Inheritance: How the Ashley Madison Scandal Relates to Estate Planning
The Ashley Madison leaks jolted Americans with the harsh reality that marital infidelity is on the rise. With more than 37 million Ashley Madison usernames exposed, it is apparent that the Internet and social media has created an instant pathway for extramarital affairs. One study asserts that infidelity exists at one time or another in upwards of 60% of all marriages.
Based on these cultural trends, it should come as no surprise to a parent that the biggest threat to their children’s inheritance is a new spouse.
For example, if I die and bequeath my assets outright to my surviving spouse and my surviving spouse remarries, those inherited assets could, if not properly managed, become subject to division in the event of a subsequent divorce. Or, if my surviving spouse remarries and while married predeceases her new spouse, it is probable that the surviving spouse will leave some or all of his inherited assets to the new spouse – who likely will not be motivated to provide for my adult children from a prior relationship.
A majority of trust and estate litigation involves new spouses sparring with children from prior relationships. This trend is likely to carry on as people continue to live longer and enter into subsequent marriages later in life.
So, in the event of death, how does one protect assets intended to benefit their surviving spouse and children from becoming subject to division or dissipation in the event of a failed marriage?
Properly incorporating trust planning for a surviving spouse and children in your estate plan can mitigate the financial risks related to a subsequent divorce. In addition to crafting a proper course of action, with proper trust planning there may opportunities to address other important tax and property considerations.
Tackling the topic of a subsequent marriage and divorce can be an awkward discussion. When establishing an estate plan, however, it is important to address the issue. As we’ve discussed, if necessary precautions are not taken, a future ex-spouse is likely the biggest threat to a child or surviving spouse’s inheritance. Structuring an estate plan which adequately addresses remarriage can serve as a built-in “prenuptial agreement” with regards to inherited assets. This can serve to alleviate an inordinate amount of stress for a surviving spouse who is contemplating remarriage by giving the surviving spouse the comfort that even upon remarriage the inherited assets will be protected for the surviving spouse and the surviving spouse’s children from a prior relationship.
All in all, while infidelity, marital discord and divorce rates are on the rise, one should take comfort in knowing that being legally proactive with proper estate planning can help ensure that the people you love are protected financially when you are gone, no matter what happens.