John and Mary, both in their early sixties, found each other after each going through a divorce. They were happy and after dating for a few months, they decided to get married. John’s three children from his prior marriage were delighted with their father’s happiness and happily attended the small, simple wedding ceremony. Similarly, Mary’s two children were pleased with the arrangement and they, too, attended the wedding. John sold his house and moved into Mary’s. John deposited the proceeds from the sale in his Fidelity account. The couple lived together quite happily for ten years. Then, quite unexpectedly, John died from a major heart attack. Not expecting this disaster, neither John nor Mary ever signed a will or related documents. It didn’t matter much since under the laws of intestacy, as John’s surviving spouse, Mary inherited a substantial portion of John’s assets with his children receiving substantially less. Apparently, not learning from John’s mistake, Mary procrastinated about doing a will herself thinking that doing a will might hasten her death. She never got around to it and a few years after John’s death, she also died. With no will in place, her assets were distributed according to intestate statutes. In Massachusetts, and probably in most states, intestate statutes provide that when there is no will, assets will be distributed to the decedent’s nearest relatives. In Mary’s case, that would be her children. Mary’s two children inherited all of Mary’s assets including those she received from John’s estate. John’s three children were less than happy when they learned Mary’s children would get everything she inherited from John and they would get none of it. Presumably, this is not the result John would have wanted either.
Had John and Mary planned properly this serious inequity could have been easily avoided. Here is what they should have done.
Clearly each should have a will in place. The wills could provide that all assets go to the surviving spouse, then divided equally, or in other proportions, to each of the children, Mary’s and John’s. This will work if things are left as stated. However, circumstances, and people, change, and so too can a will be changed. Bowing to pressure from children or yet another spouse, the survivor of John and Mary could easily do a new will with very different assets distribution.
Certainly, John and Mary should have wills. However, the way to ensure both families are protected, they should each also have a trust into which they should each transfer their respective assets. John’s trust could provide that upon his death, all assets in the trust would go to his children, or they will continue to be held in trust for Mary’s benefit and, upon her demise, then to his children. Mary’s trust would provide the same for her children. There could also be a third trust which hold title to assets acquired by John and Mary together of which all children are eventual beneficiaries, perhaps 50% to be shared by Mary’s two children and 50% to be shared by John’s three children. Or it could provide the assets be equally divided among the children.
Since these assets are in trust, they do not have to be probated and the laws of intestacy do not apply. The terms of the trusts will dictate how assets are to be distributed.