The Trouble with “I Love You” Wills
The most common estate planning document used by married couples is affectionately referred to by estate planning attorneys as the “I Love You” Will. Within this type of will, each spouse leaves all assets to the surviving spouse upon the first death, then to the couple’s joint children upon the second death.
Provided you and your spouse title all assets jointly and name each other as direct beneficiaries on your life insurance policies and retirement accounts, there is generally no probate proceeding upon the first death and your will never even comes into play.
After this, things can get tricky with some unintended consequences…
Let’s assume that you die first and your husband, after mourning your death for several years, eventually finds companionship in the arms of a new love. Your husband then proceeds to get remarried and to sign a new “I Love You” Will with his new wife, leaving all assets to the survivor upon the first death then one-half to your children and one-half his new wife’s children upon the second death.
Let’s assume now that your husband is the first spouse to die in this second marriage and that all assets transfer to his new wife as planned with the “understanding” that she will honor the terms of their agreement regarding the division of assets upon her death. Several years go by, and the new wife eventually loses contact with her stepchildren (i.e., your children).
After some time has passed, the new wife will consider all assets to be her own. Through the persuasion of her own children as she ages, or perhaps on her own initiative, there is a good chance she will eventually sign a new will naming only her own children as beneficiaries, thereby disinheriting your children. Even if she does not sign a new will, she may name her own children as direct beneficiaries on all of her assets, thereby bypassing the will with the same effect – your children receive nothing from your and your husband’s hard earned assets.
The above scenario occurs all too often. Unfortunately, a disinherited step-child generally has no legal recourse.
If you wish to avoid this common estate planning mishap, it is essential that you and your spouse explore more creative estate planning options such as a joint revocable living trust. Contact us today to set up your free initial consultation.
Source: New feed