By Pat McHugh Lambert, Esq.
I am now getting to the age where I have more friends working on their second marriage than their first. Some of those still in their first marriages often have in-laws or grandchildren living with them. And I can’t tell you how many families I know where the wife is the primary bread winner and the husband the primary caregiver. With the mixture and matches that come with families in this modern world, it is becoming almost unusual to find a traditional family. .
Nevertheless, we women often view estate planning in a traditional way. Traditionally, the husband alone met with the attorney to do the estate planning while the wife was relegated to taking care of non-financial matters. Many husbands and their attorneys often felt that wives needed protection from themselves in the event the husband were to die first. Such a traditional approach often caused great financial and emotional burdens on the wife. For example, it was not unusual for a husband to have a Will that stated that all of his assets would be kept in trust after his death to be used for the benefit of his wife during her lifetime. The Will might say that the wife would receive all of the income earned from investing the assets in the trust. Many Wills were silent as to what would happen if the wife needed more than the income that was being generated. Our office had a case where the husband died, many years later the trust is worth $700,000, the income per year is approximately $35,000, but the surviving wife who is now 80 years old wants to go into an assisted living facility that will cost $60,000 per year. Since the trust does not allow the trustee to use some of the principal, she is not be able to receive those additional funds even though using some of the principal would not fully deplete the trust. In other cases, the husband did grant some flexibility to the trustee to take care of his wife but she would be forced to call a friend, relative or financial institution serving as trustee every time she needed funds. Even though the trustee was doing what he felt was a good job, my concern is that having to ask for money could very well hurt the women’s emotional well being.
A wife should not only be involved in the estate planning process, but she should be involved in the financial process during the couple's joint lives. The wife should be acquainted with the professional advisors, including the estate planning attorney, certified public accountant and financial and insurance advisors so that she is not forced to deal with strangers if the husband dies first. She should review financial records and have a general understanding of the family's finances. There are many publications and courses that can help improve someone's knowledge of finances. We try to insist that when we are doing estate planning for married couples that both spouses are present at meetings and at the time the documents are reviewed and signed. In dealing with second marriages, particularly with children from both marriages, it is often advisable for each spouse to have a separate attorney doing his or her planning. If the wife is not comfortable with the estate planning attorney or any other advisor, she should insist that such professional be replaced with someone who she is comfortable with.
We generally recommend that unless there are serious issues concerning a spouse's ability to manage funds that he or she be involved in the decision-making process after the husband dies. For example, we have often named the surviving spouse and a financial institution as trustees for the surviving spouse and granted great flexibility to the trustees. In most cases, we allow the surviving spouse to change the financial institution so that if the bank or trust company is not being cooperative, he or she can pick someone who he or she feels comfortable with. On the other hand, the funds would be professionally managed and protected by the institution. This can be an excellent combination to satisfy a spouse's desire that the money be protected for the benefit of the surviving spouse and allow the spouse to be involved in the process of managing the trust.
Certainly, we women need to take responsibility for protecting ourselves, our spouses and our families when it comes to financial planning. This is a place where we can no longer rest on tradition.
Nevertheless, we women often view estate planning in a traditional way. Traditionally, the husband alone met with the attorney to do the estate planning while the wife was relegated to taking care of non-financial matters. Many husbands and their attorneys often felt that wives needed protection from themselves in the event the husband were to die first. Such a traditional approach often caused great financial and emotional burdens on the wife. For example, it was not unusual for a husband to have a Will that stated that all of his assets would be kept in trust after his death to be used for the benefit of his wife during her lifetime. The Will might say that the wife would receive all of the income earned from investing the assets in the trust. Many Wills were silent as to what would happen if the wife needed more than the income that was being generated. Our office had a case where the husband died, many years later the trust is worth $700,000, the income per year is approximately $35,000, but the surviving wife who is now 80 years old wants to go into an assisted living facility that will cost $60,000 per year. Since the trust does not allow the trustee to use some of the principal, she is not be able to receive those additional funds even though using some of the principal would not fully deplete the trust. In other cases, the husband did grant some flexibility to the trustee to take care of his wife but she would be forced to call a friend, relative or financial institution serving as trustee every time she needed funds. Even though the trustee was doing what he felt was a good job, my concern is that having to ask for money could very well hurt the women’s emotional well being.
A wife should not only be involved in the estate planning process, but she should be involved in the financial process during the couple's joint lives. The wife should be acquainted with the professional advisors, including the estate planning attorney, certified public accountant and financial and insurance advisors so that she is not forced to deal with strangers if the husband dies first. She should review financial records and have a general understanding of the family's finances. There are many publications and courses that can help improve someone's knowledge of finances. We try to insist that when we are doing estate planning for married couples that both spouses are present at meetings and at the time the documents are reviewed and signed. In dealing with second marriages, particularly with children from both marriages, it is often advisable for each spouse to have a separate attorney doing his or her planning. If the wife is not comfortable with the estate planning attorney or any other advisor, she should insist that such professional be replaced with someone who she is comfortable with.
We generally recommend that unless there are serious issues concerning a spouse's ability to manage funds that he or she be involved in the decision-making process after the husband dies. For example, we have often named the surviving spouse and a financial institution as trustees for the surviving spouse and granted great flexibility to the trustees. In most cases, we allow the surviving spouse to change the financial institution so that if the bank or trust company is not being cooperative, he or she can pick someone who he or she feels comfortable with. On the other hand, the funds would be professionally managed and protected by the institution. This can be an excellent combination to satisfy a spouse's desire that the money be protected for the benefit of the surviving spouse and allow the spouse to be involved in the process of managing the trust.
Certainly, we women need to take responsibility for protecting ourselves, our spouses and our families when it comes to financial planning. This is a place where we can no longer rest on tradition.
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