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Florida Estate Planning for Second Marriages

Blended family to illustrate Florida estate planning for second marriages

Marriage is a beautiful institution, and a wedding is a pivotal event.  You’re starting an optimistic new chapter in your life, and you want to be prepared for all the major personal changes a new marriage entails. A second (or third) marriage, while often every bit as significant, bring a host of even more “changes upon changes”. Thus, today’s topic of Florida estate planning for second marriages is an important one for those who’ve taken the marriage plunge more than once.

It goes with out saying that for Florida estate planning purposes, along with the emotional significance of marriage, there is also a potentially enormous financial impact.  There are important decisions to make, the ramifications of which may last for the rest of your lives.  Should you hold your assets separately or as a couple? Will you file a joint income tax return or continue filing individually? Do you need to update your estate-planning documents?  Should your new spouse be named as a beneficiary on your retirement account and life insurance policies?

Second marriages raise additional estate-planning concerns—particularly when either spouse has children from a prior relationship.  Under Florida’s intestate succession laws, spouses are afforded high priority.  And, even if a will is in place, Florida law protects spousal interests.  As a result, failure to consider the impact of a second marriage on your estate plan can result in momentous unintended consequences.

To illustrate this point, one of my most memorable clients, we’ll call her Rosa (name change to protect confidentiality) and her husband Ralph, came into my office years ago to do some planning. They opted to set up a joint revocable trust that would be freely amendable upon one of their deaths. Most of the trust assets came from Rosa and mostly consisted of a large batch of government bonds. They were a very charming and happy couple, articulate and cultured.  She had actually been a dancer in her younger years, the theatrical and not the “pole” type.  Years later Ralph passed away, and almost immediately, his family members started asking about their share of his portion of the estate. Rosa handled this scenario with grace, giving away some “stuff” and generally appeasing the rabble. We then decided to create a new trust in her name only and moved what where really her assets into it.  This all went smoothly.  However, even though the original joint trust was fully changeable (amendable or revocable) had the family members decided to, this could have become a hotly contested estate case, whittling away at Rosa’s remaining nest egg. Bullet dodged….

When doing an accounting related to Florida estate planning for second marriages, you first need to be familiar with Florida’s estate laws generally and statutes protecting spousal interests.  Then, you can decide what, if any, actions you need to take to make sure your spouse and chosen heirs are protected and your wishes are carried out.  An experienced Florida estate-planning attorney can guide you through the process.

Spousal Rights under Florida Intestate Succession Laws

A person who dies without leaving a will in Florida, he or she is said to be “intestate” and his/her Florida estate is governed by the Florida intestacy laws.  Absent some other valid plan for transferring assets (such as a living trust or other non-probate transfers), an intestate decedent’s assets are distributed to heirs according to state law.  In Florida (like in pretty much any other jurisdiction), surviving spouses of intestate decedents get top priority.  If an intestate decedent has no children—or if neither spouse has children who are not also the children of the other spouse—the surviving spouse receives 100% of the estate.  If either spouse has children from another relationship, the survivor splits the estate 50/50 with the decedent’s heirs.

Importantly, intestate succession rules only apply to assets that go through probate when there is no will.  Subject to a few laws protecting surviving spouses and minor children, a testator (i.e., the person making a will) can bequeath his or her estate however he or she pleases.  Along the same lines, assets held in a manner allowing for non-probate transfer at death are generally not affected by intestate succession rules.  So, for instance, a retirement account or life insurance policy with a named beneficiary will transfer to that beneficiary regardless of whether the deceased owner left a will.

Florida recognizes a method of joint real estate ownership by spouses, known as “tenancy by the entireties” in Florida, that enables automatic transfer to a surviving spouse upon the other spouse’s death.  If a property is owned by spouses as tenants by the entireties, the surviving spouse inherits the deceased spouse’s share without probate and becomes the exclusive owner of the property.  This form of ownership can be an efficient means of vesting full ownership in a survivor with minimal transaction costs.  The downside, though, is that the surviving spouse, as 100% owner, has full control over the property’s ultimate distribution.  So, the survivor could conceivably leave the property to someone the decedent spouse had not intended.

Florida Estate Planning for Second Marriages and the Elective Share and Homestead Act

The Florida elective share and Florida homestead laws need to be carefully considered when doing Florida estate planning for second marriages. Florida’s statutory elective share is intended to prevent disinheritance and ensure that widowed spouses have some means of support.  Even if a will says otherwise, the elective share guarantees a surviving spouse a 30% interest in a decedent spouse’s estate.

Notably, the elective share includes more than just the decedent spouse’s probate estate.  Along with probate assets, the elective share also counts assets with a POD or TOD designation, or that otherwise have a right of survivorship, and assets held in a living trust.  A similar statutory provision allows a surviving spouse to claim a one-half interest in a decedent spouse’s probate estate if the decedent’s will was executed prior to the marriage and never updated.

Under Florida’s Homestead Act, which is built into the state constitution, a married homeowner (or a homeowner with minor children) cannot devise a property that qualifies as a “homestead” other than to the surviving spouse.    If the married testator has children, a surviving spouse has a guaranteed right to either (1) a life estate in the homestead with the remainder interest to the children, or (2) a one-half interest as tenants in common with the testator’s children.  A married owner of a homestead also cannot transfer or mortgage the property without the other spouse’s consent.

Crucially, the Homestead Act spousal protections apply regardless of whether the surviving spouse is on the deed to the homestead.  However, a spouse can choose to waive the guaranteed interest (though minor children can never waive an interest in a deceased parent’s homesteaded property).  Likewise, a spouse can waive an elective share via a written agreement between the spouses executed before or after the marriage.

Florida’s intestate succession laws, and the spousal protections provided by the Homestead Act and elective share, ensure that a surviving spouse isn’t left out in the cold when the other spouse dies.  But those protections also raise some important issues for an individual embarking on a second marriage and considering how to go about doing Florida estate planning for second marriages.  After all, a surviving spouse’s heirs aren’t necessarily the same as the decedent spouse’s.  So guaranteed spousal shares potentially interfere with the other spouse’s ability to decide where his or her estate ultimately ends up.

Florida Estate Planning Complications for Second Marriages

Imagine a scenario in which newlyweds—each with adult children from an earlier marriage—purchase their dreamhouse shortly after getting married.  They decide to hold the real estate as tenants by the entireties to ensure that, upon one spouse’s death, the other will retain full title and always have a home.  They won’t be having any children together, and their mutual intent is for the valuable property to be sold and the proceeds distributed to their respective children in equal shares after the couple have both passed on.

After the first spouse dies, full title to the property automatically vests with the second as intended.  Unfortunately, though, neither spouse ever got around to drawing up a will, and, under Florida’s intestate succession laws, stepchildren do not have any inheritance rights unless they are formally adopted.  As a result, the couple’s dream house automatically descends to the surviving spouse’s children—but not to the children of the spouse who died first.  Alternatively, the surviving spouse could have bequeathed the property to his or her children and intentionally left out the other spouse’s children.

Scenarios like these are all-too-common when second marriages are involved.  To avoid the unfair or unintended inheritance results that can arise from second marriages, the most important thing is to plan ahead.  Working together (ideally alongside an experienced estate-planning attorney), spouses should decide as early as possible exactly what they want to happen to their assets after they are gone—and develop an estate plan that ensures their wishes are eventually carried out.  If at all possible, you should have at least the basic framework of an estate plan worked out before a second marriage becomes official—especially if one or both spouses have children from an earlier marriage.

Stepchildren are by no means the only potential estate-planning complication that can arise in second marriages. If one spouse brings significantly more assets into the marriage than the other, the elective share could result in the wealthier spouse’s heirs losing a large portion of their inheritance.   Or, if either spouse has significant debts that pre-date the marriage, creditors may be able to attach the other spouse’s assets if the couple doesn’t plan carefully.

For instance, if one spouse owns a non-homestead property and, after exchanging vows, records a new deed granting the real estate to the couple jointly, the second spouse’s creditors may be able to record a lien against the property.  To avoid this result, the couple will want to limit the extent to which they co-mingle their assets and—particularly with valuable property that could potentially be attached—avoid joint ownership.

Estate Planning and Prenuptial Agreements for Second Marriages

Prenuptial and Post-nuptial Agreements in Florida

Prenuptial agreements have something of a cynical reputation in popular culture.  We often imagine an affluent older spouse using a prenup to protect wealth from a young, opportunistic “gold digger.”  Though that does occur, prenuptial agreements are just as important for a potential bride and groom who both bring substantial assets into the marriage and who both want to ensure that children from prior to the marriage are suitably protected in the long-run—whether the “long-run” means a future divorce or the death of one spouse. Used appropriately, prenups are designed to avoid conflict not cause it.

In essence, a prenuptial agreement is a negotiated contract that precisely defines which of the couple’s assets will be considered “marital property” and which will be “separate property.”  By keeping certain assets separate, a prenup ensures that one spouse’s death or a divorce does not prejudice a spouse’s right to leave certain wealth to the heirs of his or her choosing.  For instance, if one spouse owns a farmhouse that has been in the family for generations—and which he or she wants to ensure stays in the family—a prenuptial agreement could guaranty that the farmhouse ends up with the next generation.

A well-drafted prenup identifies and defines precisely what rights are granted or reserved to a surviving spouse, that spouse’s children, and the children of the decedent.  And, as mentioned above, Florida law allows for a waiver of spousal rights under the Homestead Act and the statutory elective share.  If waiver of those rights is necessary for an estate plan to work correctly—or to protect the rights of one or both spouses’ children—a prenuptial agreement is a good place to document the waiver.

Post-nuptial agreements do pretty much the same thing as prenups, except that the agreement is executed after the exchange of vows rather than before.  If possible, a prenuptial agreement is usually preferable, as they are easier to enforce because consideration for the agreement tends to be easier to demonstrate.

To be enforceable, a prenuptial or post-nuptial agreement in Florida should be in writing, signed by both spouses, and should clearly and unambiguously define any rights that are being granted or relinquished.  It’s also a good idea to append an asset schedule that definitively establishes what is being waived and what is being reserved, so as to avoid later claims that wealth was concealed.

Certain types of trusts (such as A-B trusts) can also be used to resolve complications raised by second marriages.  A-B trusts in Florida and similar estate-planning instruments keep assets out of probate and allow for distribution under the terms of the trust rather than intestate succession laws.  It’s important to remember, though, that the elective share provided to surviving spouses under Florida law extends beyond just probate assets, so trusts should be used carefully.  A seasoned Florida attorney can provide advice on using prenuptial agreements, trusts, and other estate-planning strategies to address concerns raised by second marriages.

Steve Gibbs, Esq.

Hear more about this topic on the Lovable Lawyer Podcast.