26 Aug 2016

Stepmothers and Stepfathers: Can they take the kids inheritance?

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You bet they can!!!   Whew!!   Is this a common problem.

Dad remarries and starts putting assets in his new wife’s name.  His intent is for his new wife to provide for his own children after he dies.  And maybe the stepmother even agrees with him that she will do so.  Unfortunately, it usually does not work out that way.

Here is what happens: Dad puts assets into the new wife’s name, or simply leaves her as a beneficiary in his will and trust, with the new wife’s promise that she will ‘take care’ of his kids when he dies.  After he dies, what she does instead, is keep all the assets for herself and ultimately wills them to her own children, not Dad’s children.   Unfortunately, the core problem is, Dad cannot leave property to his kids that he no longer owns.  And by making his new wife the beneficiary of his estate, or by simply gifting those funds to her outright, he no longer owns those assets and the new spouse (wife or husband) can do whatever they want with those assets, including gifting them to her own children.

This very problem was described in a recent Marketwatch article under the Moneyologist column.  Here, Dad put the step mother on his home, Dad died, and the new mom sold the home for $1,000,000, bought a new home for $500,000 and kept the balance, sharing nothing with Dad’s children.   This happens frequently, and there isn’t much Dad’s kids can do about it.  This article can be viewed on Marketwatch here:

http://www.marketwatch.com/story/my-father-left-his-home-to-his-children-my-stepmother-sold-it-for-1-million-2016-05-02

 Dad could have and should have taken other steps to protect his kids. For one, he should have done a pre-nuptial agreement, where both he and his new wife agree to allow their pre-marital assets to his own kids.  He could also have provided for his new wife by settling up a Marital Trust, where she would be the beneficiary of his assets after his death but his kids (and not her kids) would ultimately inherit the remaining assets after the step mother dies.

My commentary and solutions discussed in this article and constitute legal information, not legal advice.   Possible solutions discussed may or may not apply to your situation, may vary from state to state, and   not be available in the state where you reside.   If you are a Colorado resident, please feel free to call me for a free consultation at 303-457-9500.  Alternatively, be sure to discuss these issues with a competent estate planning attorney before taking any action.

Please feel free to contact me to set up a free consultation at 303-457-9500.

 

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