My father recently told me that he wants to marry his girlfriend soon and I worry that he is rushing his estate planning, especially regarding his children’s inheritance. My father is 48 years old and his wife, from his second marriage, died of cancer three years ago.
He was devastated and I’m happy he found someone who makes him happy. His girlfriend is 49 years old and they have been dating for a year and a half. I think it’s wonderful that they want to get married; however, I want my father and family to be prepared and protected financially.
My family was very close. My grandfather owned two large companies and major real estate, and my parents, aunts, and uncles all worked for him. We had weekly family dinners, spent holidays together, and all went on family vacations.
My grandfather and grandmother both died of cancer in their 50s. My father and his brothers received a significant inheritance, but the distribution of the trust completely divided him and his brothers. The brothers no longer speak to each other or have any role in each other’s lives.
It was completely devastating to lose our family dynamic, and has been for years since. The last thing I would want to happen is for something like this to happen again. When my father told me that he wanted to get married, I felt the need to have an uncomfortable conversation about his ownership of him.
Not an “early” marriage.
He’s very secretive about his finances, so it’s an uncomfortable thing to bring up. He told me that he has a trust that owns everything – real estate and investment accounts – except a few personal cars. He feels protected without a prenuptial agreement.
I’m only 23 and would like some advice on how to have this conversation with my dad. When you sell the business or one of your properties, is the trust technically the one selling them? If they ever get divorced, would she be entitled to it?
If he were to die before you, what would happen if you were not a beneficiary of the trust? What other questions should I ask? Where is the line between wanting to be prepared and also respecting her privacy? I want to protect my family for the future.
I don’t think your girlfriend has bad intentions. However, my siblings and I are all grown up and I don’t think she should be entitled to her estate in the same way as an early marriage. I see her as my father’s partner and I am very grateful that he has her.
I don’t see her and her children as deeply integrated into our family as a stepmother, and I don’t consider her children to be my siblings. Thank you for any advice you have for me and for everything I learned from reading your article.
The daughter
See also: My partner is against marriage. I don’t have the deed to his house, but he set up a revocable trust in case he dies first. It’s risky?
“He may view your questions as casting a skeptical shadow on his girlfriend, assuming they are in a first period or romance.”
MarketWatch illustration
Dear daughter,
Think very carefully before you speak. It’s a very sensitive topic.
First, the good news: Your feelings about your future stepmother and her children may change, and you may welcome them into your family as loving personalities who have a lot to offer. Now, the bad news: The terms of your father’s trust, last will, and testament can also change.
That’s why it’s important that you proceed with caution if and/or when you decide to inquire about their assets and how they intend to structure a will or trust. He may view your questions as casting a skeptical shadow on his girlfriend, assuming they are in their first period or in a romance.
It is a delicate and special moment for your father. The nature of romance – the early days, months and even years of a relationship – often means you often idealize your partner and see them as separate from the harsh realities of everyday life. It could also lead to him being overprotective.
Leave your feelings towards your father’s partner and his children out of the loop. Obviously he loves her and it is irrelevant whether you consider it an “early” marriage or not, and see it in a different light. At 23, 49 may seem old. But they could spend four decades together.
Stick to the facts, don’t make personal comments, and be honest about what happened to your father and his brothers. This is not an unusual concern; Over the next decade, approximately $16 trillion will flow from older family members to millennials and Generation X.
“Assets in a trust are not subject to equitable distribution unless they contain marital property,” Jewell Law says. “All money paid from a trust to the beneficiary spouse remains separate property as long as it is maintained in a separate account and not commingled with marital funds.”
Prenuptial agreements add protections
Remember, no one is entitled to anything. Start the conversation off on the right foot by saying that a prenuptial agreement can help your future “stepmother” as much as it could help your father, and outline how it can complement a revocable trust by laying out other financial matters in greater detail.
Your father has already taken steps to set up a revocable trust for his children, which should protect those assets from any claims by his third wife in the event of a divorce. Unlike a prenuptial agreement, he doesn’t need his girlfriend’s signature to do so.
That said, I support both trusts AND a prenuptial agreement. A prenuptial agreement should be created before the wedding day with an attorney. It can also address issues that a trust cannot address. These include documenting your premarital assets and liabilities and how they will be divided in the event of a divorce.
The prenuptial agreement is useful for alimony and child support. They can also illustrate what will happen to the property if, for example, your father dies. He may decide to give her a lifetime lease, that is, to live in the house for the rest of her life. Some states even allow “no cheating” clauses.
It should update beneficiaries on its 401(k) and IRA, and other accounts it wants to avoid probate, public accounting of its assets and liabilities. However, some experts recommend placing brokerage accounts in a trust to avoid triggering any probate thresholds in your state.
It is possible to be encouraging and pragmatic, assertive and sensitive, practical and helpful. Your dad has been through a lot and you’re getting used to having these new people in your family too, but at the end of the day it’s your dad’s life, so know when to give him his space.
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