By Attorney Suzanne Sayward

The famed English writer Samuel Johnson once said, “A second marriage is the triumph of hope over experience.” While that may be overly cynical, there are many challenges that so-called blended families face. One of these is estate planning. Here are five issues that couples in second or later marriages need to be aware of before and during the estate planning process.

1. Choose your fiduciaries carefully. The Personal Representative of your Will (formerly called executor), your attorney-in-fact under your durable Power of Attorney, and the Trustee of your Trust are all fiduciaries. Choosing your fiduciaries carefully is always important, of course, but in a second marriage it is especially important. Typical provisions in a durable Power of Attorney grant the named attorney-in-fact the authority to change beneficiary designations on retirement assets and life insurance, to sell real estate, and to make gifts of the principal’s assets. The Personal Representative of a Will is usually charged with distributing the tangible personal property of the decedent. A Trustee may be responsible for managing significant assets for many years and may have discretion to decide under what circumstances those assets are distributed to the Trust beneficiaries. Naming an adult child to serve in these roles is common but may not be the best choice for couples who have children from prior marriages. An unrelated third party or even a professional fiduciary such as a lawyer or Trust company may be the best option for couples in a second marriage to avoid or minimize discord between the two families.

2. Update beneficiary designations. As part of the estate planning process I always advise clients to check the beneficiary designations on assets such as life insurance, annuities, IRAs, 401ks and other employer retirement plans. This is particularly important for individuals who have been previously married, as the prior spouse may still be on record as the beneficiary of these assets. There are many court cases involving disputes between the current spouse and prior spouse of a deceased person where the deceased had remarried but never removed his or her ex-spouse as beneficiary of retirement funds or life insurance. In addition, federal pension law mandates that an employer retirement plan must pass to a surviving spouse at the death of the participant unless the spouse has waived this right in a notarized statement signed after the marriage. This can be a trap for the unwary couple who enter into a prenuptial agreement agreeing that retirement assets will pass to the children of a prior marriage only to find upon the death of one spouse that the failure to sign the waiver after the date of the marriage has caused that provision to fail.

3. Long-term care concerns. The possibility that long-term care will be needed is a concern of many clients since the cost of full-time care, whether at home or in a long-term care facility, averages between $10,000 and $12,000 per month in Massachusetts. Because the cost is so high, many families end up relying on Medicaid (not to be confused with Medicare) to pay for that care. While many older couples in second marriages have prenuptial agreements which state that each spouse is responsible for his or her own long-term care costs, most do not realize that such agreements are not honored by Medicaid. When one spouse applies for Medicaid benefits to pay for long-term care, the assets of both spouses are counted in determining eligibility for Medicaid benefits. That means that if one spouse uses all of her assets to pay for her nursing home care and thereafter applies for Medicaid, she will not be eligible until her spouse also spends down his assets to the allowable program limit, even if they have a prenuptial agreement that says otherwise.

4. Winner-take-all Wills. Sometimes I meet with new clients who have estate plan documents that they ask me to review. Many have what I call, “winner-take-all” Wills. In this scenario, each spouse’s Will states, “I leave everything to my spouse, and if he/she doesn’t survive me, I leave everything to my children.” Wills drafted with this language will result in the assets of both spouses passing entirely to the children of the spouse who dies second. When I point this out to clients, they almost always tell me that this is not their intent.

5. Continuing obligations to a former spouse. A common component of the estate planning process involves determining the income and assets that will be available to the surviving spouse upon the death of the first spouse. In reviewing the availability of funds, it is vital to consider legal obligations to a former spouse. For example, if a husband’s divorce agreement requires him to maintain a $200,000 life insurance policy in favor of his former spouse and he fails do so, upon his death his former spouse will have a legally enforceable claim against his estate. This could have a serious impact on the surviving spouse if she was relying on those funds to pay her living expenses.

One easy and effective step that couples in a second or later marriage can take is to make their wishes clearly known to their families. The best way to do that is by writing them down. Legal documents such as Wills, Powers of Attorney, Health Care Proxies and Trusts are a must to ensure those wishes are carried out. However, a personal letter to family members in your own words letting them know that it is your wish that your second husband have the use of all of the furniture in the house during his lifetime, or that it is your primary intent that your assets be used for the care and comfort of your second wife even it means that all of the assets are used up during her lifetime, can go a long way to minimize family discord.

Attorney Suzanne R. Sayward is certified as an Elder Law Attorney by the National Elder Law Foundation. She is a partner with the Dedham firm of Samuel, Sayward & Baler LLC. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information visit www.ssbllc.com or call 781/461-1020.