A Second Chance at Love Came with a Price

A gentleman whom we will call Ed was married for many years. He and his wife had raised three children. Later in life, Ed remarried. We will call his second wife Mary. Ed had created a trust to pass assets down the line to his loved ones in the event of his death, almost one year to the day before he married Mary. Perhaps in celebration of their recent nuptials, Ed had his trust redrafted after the wedding.

In the new, restated version of his trust, Ed appointed Mary as trustee if he should predecease her. The trust, as redrafted, provided that Mary would have a life estate in several valuable assets, including the income from a block of corporate stock and the home that Ed owned. Under the terms of the life estate, Mary would be able to spend the income from the stock as she wished and live in the residence for as long as she lived.

The restated trust also provided that, if Ed died before Mary, other valuable assets would be held in the trust during Mary’s lifetime to provide additional support for Mary for so long as she might live. Under the terms of the trust, after Mary’s death, Ed’s three children would each receive 1/3 of a specific group of assets. A college and certain of Ed’s grandchildren would also receive distributions from other assets. Ed died less than four months after his marriage to Mary.

Following Ed’s death, Mary retained a lawyer of her own and, through that lawyer, gave notice to all other family members and to the Christian college that she would exercise her authority as trustee over the trust and executor of the estate, and would liquidate all assets. In essence, Mary took the position that she would need all the assets to live on, and that, under the broad authority she had been granted, she would go ahead and sell the assets and put the proceeds in a bank account in her name. 

In response, Ed’s three children filed a petition seeking to compel the probate judge to construe, that is, interpret, the provisions of the trust agreement to determine whether Mary actually had such authority. Not to be left behind, the college joined the lawsuit filed by the children. As is often the case in such matters, resourceful lawyers raised many issues before the judge, and a complex trial followed. At the end of the trial, the judge largely ruled against Mary and in favor of the children, the grandchildren, and the college.

Predictably, Mary appealed the probate judge’s decision, and the appellate court reviewed all the facts of the case and the points of law raised by the lawyers. While most of the rulings made by the probate judge were upheld, some were reversed. The case was sent back to the probate court, where more hearings will undoubtedly occur. The lawyers stand to reap a rich harvest of fees from the seeds of dispute that Ed planted, albeit unintentionally.

So what could Ed have done differently? Had Ed come to our office, we would have advised him to create an antenuptial agreement with Mary. Such an agreement would provide that Mary waived her claim to the assets in Ed’s existing trust if the marriage ended by Ed’s death or by divorce. The antenuptial agreement would define the amount of support available to Mary. Under no circumstances would we allow the antenuptial agreement to provide that Mary be supported at whatever level of support she wished. We can provide that the provisions of the antenuptial agreement would govern a new trust between Ed and Mary, funded with assets they acquired during their new marriage.

Also, we would have advised Ed not to make Mary the executor of his estate, nor to allow Mary to be a trustee of his pre-existing trust. We would have urged Ed to appoint one or more members of his immediate family, or a trusted third party other than Mary, to serve in that important role. Ed gave Mary too much influence in his new blended-family situation. The result was costly – not only in fees, but also in lost family relationships, which Ed was no longer alive to repair.