Amid all the hand-wringing, the fact is sometimes overlooked that the institution of divorce has established a history in this country. Furthermore - witness the rate of remarriage - Americans still believe strongly in marriage.
Although an unlimited amount of assets may pass to a spouse tax-free, leaving the lion's share of the estate outright to one's spouse does not always make sense. Such a disposition can disenfranchise children of a prior marriage. It would fail to take into account the increasingly common situation that both spouses bring assets to the marriage which they would like to see preserved for their separate descendants. To avoid these unintended results, New Jersey residents sometimes resorted to the use of devices which did not benefit the spouse - such as revocable trusts or property held jointly with children.
From a planning point overview, there are a few key points to keep in mind when estate planning for second marriages. Remarriage does not revoke a will, but the new spouse, if not provided for, has rights. These rights may overrule the will. So if, like most of us, you actually want your assets to pass in the way you have written down, you should do new estate planning in contemplation of or following a second marriage.
Remember a spouse has rights under New Jersey law, and, in particular, the right to an "elective share" of the estate - even if you provide otherwise in your will.
Also, from the estate planning point of view, the device perhaps most specifically tailored to second marriages is the Qualified Terminable Interest Property (or QTIP) trust. Normally a married person will want to avoid the estate tax at death by taking advantage of the marital deduction - which will avoid the estate tax at death by taking advantage of the marital deduction - this allows one to leave whatever one chooses to a spouse tax-free.
In the second marriage situation, it may not be desirable, however, to disenfranchise the children of a first marriage by leaving everything outright to a second spouse. The QTIP provision allows one to leave an income interest only to the spouse, preserving the principal for the children - and still qualify the assets passing in trust for the marital deduction. QTIPs have become the marital deduction vehicle of choice. They have other advantages besides preserving assets for the children of a prior marriage, but they are uniquely designed to address such situations.
Finally, special care may have to be taken in drafting estate planning documents as to how to treat children from different marriages. Is it intended that all children of both marriages be treated the same? Are there certain assets - perhaps inheritances from the grandparents that should be specially allocated to one set of children? These issues can and should be addressed.
Second marriage will be with us as long as there are first marriages. A little forethought will avoid unintended legal consequences or worse - litigation!
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