Family feuds over inheritance are as old as the Bible (Jacob tricked his twin brother Esau out of his birthright and their father’s blessing), and they can multiply in blended families. There are ex-wives and ex-husbands, children and stepchildren, parents and stepparents.
More than half of all first marriages end in divorce and about 75% of divorced people will marry again. About 65% of these unions will include children from previous marriages. (National Stepfamily Resource Center).
So, here’s a scenario that I get so often that it deserves its own blog post!! Dad dies. Stepchildren claim that stepmother is taking dad’s assets. Stepmother claims that all of the marital assets passed to her and the children are just harassing her. There’s conflict and confusion. Each side accuses the other of greed and ill will. Neither side understands its rights. EVERYONE IS UPSET… No one understands what they are actually supposed to get and NO PLANNING WAS DONE BEFOREHAND. Lack of planning of course, is fundamentally at the root of the problem (because even if you don’t plan, the State has a plan for you although you may not like it! But I digress…)
So here’s a step by step process to help you sort it out.
Step One: Make a List OF WHAT THE Assets are & HOW THEY ARE Titled.
it is important to start with a solid list of the decedent’s assets and how they are titled. That will determine the need for probate and the rights of the various parties. If you don’t know what the assets are and how they are titled, you’re stuck.
Step Two: Remove All Non-Probate Assets From the List.
Not all assets are probate assets. Many assets pass automatically to a survivor based on how the asset is titled. Common examples of “non-probate” assets include:
- Real estate that is owned jointly with rights of survivorship will pass to the surviving owner(s).
- Bank accounts that are jointly owned will pass to the surviving owners.
- Life insurance and financial accounts (bank accounts, brokerage accounts, CDs) that have valid beneficiary designations will pass to the surviving beneficiaries.
- Assets that are titled in a living trust will pass in accordance with the terms of the trust.
In most cases, if the stepmother is able to get to the assets, it’s because she has a right to them. That’s not a hard and fast rule (after all, there is still some good old fashioned theft going around). But keep in mind that third parties (like banks, realtors, and title companies) know when probate is required and when it isn’t. If they are giving the stepmother access to the decedent’s property, it is usually because she became the owner of the property at the decedent’s death.
In other words, if the stepmother is spending money from a bank account, it is usually because she is a joint owner or designated beneficiary on the account. Otherwise, the bank wouldn’t give her access to the account. Similarly, if she sells real estate, it is because the real estate was titled jointly with rights of survivorship. Otherwise, she wouldn’t have insurable title. You get the picture. The ability to deal with the assets usually indicates ownership of the assets.
Step Three: Be Sure that You can Prove Ownership of Whatever is Left
Once you’ve made a list of assets, then subtracted out the non-probate assets, the assets that remain are assets of “the estate”. These are the “probate assets” that are governed by the deceased person’s will (if he had one) or the intestacy laws (if he died without a will).
If the decedent had a bank account or parcel of real estate in his name alone, everything is straightforward. That property will pass under the will or through the intestacy laws to his heirs are beneficiaries. The rights of the children and the stepmother in the property are easy to determine. All that needs to be done is to choose the person to represent the estate, hire the probate attorney, and start the process.
But many times, all that is left after subtracting out the non-probate assets is miscellaneous personal property (household furnishings, etc.). You then need to be able to prove who owns that property. If dad and stepmother went to the local retail store and bought a big screen TV, who did it really belong to? Can you prove in court that it was your father’s alone and not the stepmothers? In most cases, the answer is “NO.” This kind of factual difficulty makes it almost impossible to claim an interest in most personal property.
This whole mess is why it is even more important for Blended Families to do estate planning; that way, everyone is on the same page. I see families who fight over every nickel and never talk to each other again and I wonder if it could have all been avoided had Planning been done.
If you have any questions call my Office and schedule a Family Wealth Planning Session with Jackie or email her at Jackie@trustcounsel.com.