Prenups---Part II: Late-in-Life Remarriages

"When I brought it up, [my future stepmother] was really mad at me. But the reality is that when a parent dies, you want your money. It sounds coldhearted, but it's true".
(Newton , Massachusetts C.P.A. Judith Ludwig, quoted in SmartMoney, concerning her insistence that her father have a prenuptial agreement before he remarried).


Ms. Ludwig is right on both counts: it does sound coldhearted to think of your father's or mother's money as your money, and it is true that people do it all the time. Of course, adult children can also be legitimately concerned that someone might be taking advantage of their parent, especially if the parent is widowed, lonely, in poor health, or otherwise vulnerable.

No matter what their motives, adult children are increasingly unwilling to sit on the sidelines hoping and praying that mom or dad's new spouse isn't a gold-digging con artist. One way or another, they're likely to make their feelings known, often to the annoyance of both the parent and the prospective stepparent. Family relationships can become strained, to say the least. Stepparents will sometimes get the silent treatment from suspicious stepchildren, and parents have been known to disinherit children for expressing their opinions too bluntly.

I'm not saying that older parents should necessarily take orders from their children, but they should anticipate that a late-in-life remarriage can trigger all sorts of fears, tensions, and even hostilities. The best way to defuse the tensions before they explode is to have a prenuptial agreement that specifies in no uncertain terms not only who gets what in the event of divorce, but who gets what in the event of death.

The underlying legal complication is that, without a prenuptial agreement to the contrary, a surviving spouse has a guaranteed, statutory right to inherit approximately one-third of his or her spouse's estate (the exact percentage varies from state to state, but one-third is the most common percentage). The law calls this the "elective share". It doesn't matter if the decedent had only been married a month, or had verbally promised his seven kids from his first marriage that they would get everything. It doesn't even matter if he had left a will leaving everything to his kids. The spouse still gets the one-third elective share---even more, if the decedent had a will leaving a bigger share to the spouse.

A properly-drafted prenuptial agreement can not only itemize all of the assets that each party is bringing into the marriage, but can specify that, upon a party's death, those "separate" assets that still remain intact will not be inherited by the surviving spouse. The prenup in essence specifies that each spouse waives in advance his or her elective share.

To ensure that the money or assets that are not going to the surviving spouse actually go to the kids (or to whoever the decedent wants them to go to), it's vital to have a will that is consistent with the prenuptial agreement. It may also be necessary to scrutinize life insurance policies, annuities, 401(k) plans, and anything else that has a payout procedure upon death. There may be additional forms or other documents needed to prevent the surviving spouse from automatically becoming the sole beneficiary of those policies and plans.

Because of the potential complexities, second-marriage prenups should not be drawn up in a vacuum, but should be part of a consistent estate plan. Thus, the parties need to consult attorneys who are experienced not only in domestic relations law, but in taxation, pensions, and other estate planning issues.

Once all of that is done, the new husband and wife will still have to decide what to tell their respective children about the documents they have just signed. My guess is that the majority of people would say nothing, unless the kids had clearly expessed their concerns; most people are simply uncomfortable discussing their finances with their kids. That's sad, because adult children aren't normally demanding to see tax returns, bank statements, and other financial specifics. They just want a general outline of what to expect when the parent dies. And that's what I would give them. I might also want to say that attorney so-and-so prepared the prenup and the other documents, and that he or she has either the originals or copies of them. That way, you're minimizing any fears of the documents being destroyed or conveniently misplaced by the stepparent.

Like any marriage, a late-in-life marriage will always have its challenges. But addressing the universal---if not always spoken---fears of the adult children will go a long way toward ensuring that the marriage gets off to a good start.