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Tom Skerritt, the “Top Gun” flight instructor and Emmy-winning sheriff of “Picket Fences,” died last week at 93. “He is survived by his third wife, Julie Tokashiki, and five children,” The Associated Press reported (1).
His family hasn’t made his estate plans public, and I’m not going to guess at them. But that one sentence describes a family shape millions of Americans share.
In 2013, 40% of new marriages in the U.S. included at least one partner who had been married before, according to a 2014 Pew Research Center analysis (2). Pew also counted almost 42 million Americans who had been married more than once (2).
I’ve been a CPA since 1981, and I was the executor of my parents’ estate. I can tell you that the law has its own ideas about who gets what, and they don’t always match what you’d want.
For example, in most states, elective share laws give a surviving spouse a fixed fraction of the estate. Traditionally, that fraction is one-third, “regardless of the length of the marriage,” according to Cornell Law School’s Legal Information Institute (3).
And many workplace retirement plans have their own rules that favor your spouse (4).
So if you’ve remarried, or you have children from more than one marriage, here are 5 estate moves to make while you still can.
1. Don’t count on a simple “everything to my spouse” will
It’s a common plan in a second or third marriage: leave everything to your spouse, and trust that your spouse will take care of your kids later.
Here’s the problem. Once the money is your spouse’s, it’s your spouse’s. Your spouse can remarry, change the will, or simply run out of money in a long retirement. Your children may get what’s left, or nothing.
If you want your kids to inherit, put it in writing in a way that doesn’t depend on anyone’s goodwill.
2. Know that in most states you can’t simply write your spouse out
Some people try the opposite: leave everything to their own children and nothing to a newer spouse.
In the U.S., elective share laws exist “to prevent the disinheritance of a spouse,” Cornell’s Legal Information Institute notes (3). Those statutes give a surviving spouse a fixed fraction, typically out of the probate estate (3).
The lesson: if you and your spouse agree that your kids should get your money, put that agreement on paper with a lawyer, not just in your will.
3. Check your retirement accounts — your will may not control them
Here’s one many people miss. Under federal rules, many workplace plans must pay a survivor benefit to your spouse unless your spouse consents in writing to something else (4).
The IRS says plans “must require a plan representative or notary witness the spouse’s consent” (4).
So if you’ve been assuming your will decides who gets your 401(k) or pension, find out what your plan’s rules and your beneficiary forms actually say.
This is exactly the kind of tangle where a second set of eyes pays off.
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4. Consider a trust that takes care of both
For a blended family, a trust is often the cleanest answer. One common setup lets your surviving spouse use the income, or live in the house, for life. When your spouse dies, what’s left goes to your children.
That way, nobody has to pick between the spouse and the kids, and nobody has to trust anybody else to do the right thing.
Without a plan, courts decide everything, probate drags on for months, and loved ones are left guessing. You can shield them with a will, a trust or both with little time or expense.
A will locks in exactly who gets what — yours in minutes for $199. A trust goes further, controlling how and when heirs inherit, starting at just $499.
5. Use life insurance to even things out
Sometimes there’s just not enough to go around. The house may need to go to your spouse, and your retirement plan may have to as well.
Life insurance can fill the gap. Name your children as beneficiaries of a policy, and they get money of their own without anyone fighting over the house.
If anyone depends on your income — a spouse, kids, even a mortgage cosigner — term life insurance is the cheapest way to protect them. And it costs less than most people think, especially if you lock in a rate now: premiums rise with every birthday.
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My honest take
Tom Skerritt told The Ottawa Citizen in 1992, talking about his career, “Then the family came along and I had to support them” (1). That’s about as honest a description of grown-up life as I’ve heard.
Supporting a family doesn’t end when you do. In a blended family, it takes more planning, not less.
Sit down with your spouse, and if you can, with your kids. Agree on who should get what. Then get it in writing, the right way, while you’re the one making the decisions.
Sources: 1. The Associated Press (via WDIV ClickOnDetroit); 2. Pew Research Center; 3. Cornell Law School Legal Information Institute; 4. IRS
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