Question: My spouse and I each have children from previous marriages. One goal of ours is to provide for the survivor of us when the first of us passes away. We also want to have a plan that gives our respective estates to our children. What is the best way to make this happen?
Answer: This is a common question given the amount of “blended families” in the greater Nashua area considering their estate planning options.
New Hampshire law states that a surviving spouse has certain statutory rights regarding the deceased spouse’s estate; i.e., a right to receive generally one-third (1/3) to one-half (1/2) of their spouse’s assets at the death of the first spouse. That means that even though you might effectively “disinherit” your spouse by distributing probate and non-probate assets to your children, the surviving spouse can still elect to receive one-half of your estate (this may include assets that pass inside and outside of your Will, such as joint accounts).
A pre-nuptial agreement containing a waiver of the right of election can solve this problem. In this way, each spouse mutually waives their right to take 1/3 or 1/2 of the first deceased spouse’s estate, thereby enforcing what you already agreed upon.
The manner in which assets are titled and the type of investments make a difference. The surviving spouse may have a right of election against some but not all of your assets. By changing the way assets are invested, you may be able to avoid the right of election. For instance, life insurance is not subject to the elective share. Finally, you should carefully review all of your assets (including life insurance and retirement funds) to see how they are titled and review the designation of beneficiaries as well.
Trusts can also be useful planning documents in these situations. The first spouse to die would transfer the property to a trust for the benefit of the surviving spouse giving them certain rights to the other’s property for the remainder of their life but ensuring that the remaining trust property be distributed to the decedent’s children when both spouses have passed away.
One other option that is a new development is that New Hampshire now allows a “post-nuptial agreement”, wherein each spouse agrees to waive certain interests that spouses have in the other’s estate.
A well thought out estate plan, one to which both spouses have consented, will make sure that your assets pass to those whom you have designated while still providing for the surviving spouse during their lifetime.
If you need help with this or other estate planning matters please contact Attorney John S. Polgrean.