"Her husband wants to be the administrator of their trust."
"Her husband is open to a trust, but he wants to be the administrator of the trust." (Photo subjects are models.)
Dear Quentin,
A family friend has extensive real-estate holdings owned jointly with her husband of 30 years. They are joint tenants with the right of survivorship. Both have children from previous marriages. My friend is trying to figure out how to ensure that her children get her share of the estate should she die first. He is open to a trust, but her husband wants to be the administrator of their trust - which, I understand, could later be changed.
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Neither a last will and testament nor joint tenancy with the right of survivorship will necessarily be the final word.
Dear Looking,
If both spouses have children from previous marriages, they both have an incentive to ensure that those children are not left out in the cold if their parents die first. Women outlive men in the U.S. by around six years, so if your friend and her husband are around the same age, she is likely to outlive him. In that circumstance, whether she makes her husband's children whole - if you agree that his children should have a slice of the pie - would depend on her largesse.
They're right to sort this out now: Neither a last will and testament nor joint tenancy with right of survivorship will necessarily be the final word. A will can be made and a will can be changed, and it can be done in secret, without a spouse's knowledge or consent. Having a prenuptial agreement - or, in this case, a postnuptial agreement - would be much preferable to relying on either your friend or her husband keeping their word after the other person dies.
This woman wrote to me last year to say her husband had written a secret will when they were in a bad place in their marriage. She had no idea what was in this new will. In many cases - depending on the terms of the agreement - a joint tenant and people who have community property with right of survivorship can sever the right of survivorship without the consent of the other joint tenant. The law, as always, varies by state.
This is a cautionary tale - and a teachable moment - for anyone who has a blended family, with children from previous marriages.
Any property purchased prior to a marriage belongs to that spouse alone unless it has been commingled in some way. Commingling could happen, for example, if your friend bought a house before she married and her husband contributed financially to a significant renovation or made mortgage payments. But if she dies before he does, their joint property would go to him under the current joint tenancy with right of survivorship.
As you correctly indicate in your letter, one solution - aside from breaking the existing joint tenancy, assuming that would be possible under the current terms - would be to set up a revocable trust that becomes irrevocable upon one of their deaths. "Most trusts contain terms about how to effect an amendment to the trust," according to McLane Middleton, a law firm with offices in New Hampshire and Massachusetts.
Your friend would need to ensure that the trust's terms and governing amendments are rock solid. If they are not? "The settlor can alternatively amend the trust via any method that shows his or her intent to do so by clear and convincing evidence," McLane Middleton says. "Clear and convincing evidence is a high bar to meet. It falls somewhere between the 'more likely than not' standard applicable in most civil cases and the 'beyond a reasonable doubt' standard applicable in criminal cases."
This is a cautionary tale - and a teachable moment - for anyone who has a blended family, with children from previous marriages. Keep property you held prior to your marriage separate; make sure your beneficiary designations and your will are up to date and review them regularly; and make sure that you know the terms of property titles when you sign them. Your friend and her husband both have inheritances to gain and lose, so hopefully they will find a compromise.
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You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com, and follow Quentin Fottrell on X, the platform formerly known as Twitter.
The Moneyist regrets he cannot respond to letters individually.
More columns from Quentin Fottrell:
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At times, the pain is unbearable': My daughter cut me out of her life. I'm conflicted - do I exclude her from my will?
'I have zero regrets': I'm 84 and estranged from my two adult sons. My 48-year-old wife will get my seven-figure estate. Is that selfish?
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