In second marriages, how a person provides for his or her surviving spouse (or registered domestic partner) and/or surviving minor children often involves balancing their concern for the needs and expectations of their second family with their concern for the needs and expectations of any children from a prior relationship.
Unfortunately, the children from any prior marriage may be more concerned about their inheritances than they are about the welfare of their step-parent and/or their half-siblings.
Conflict may arise over the distribution of the estate, particularly as regards the sale of, and the distribution of the proceeds from, the deceased spouse’s residence, which the surviving spouse and minor children may still need to live-in. The decedent’s residence is often the most valuable asset. Additional pressure can come from the decedent’s creditors.
Determining what protections the decedent’s surviving spouse and minor children involves answering numerous questions.
Was the decedent prior to death already required by Family Court order(s) to provide for his or her dependents by writing a Will, establishing a Trust or maintaining life insurance for their benefit? Is the decedent’s estate subject to a Probate? Does the decedent’s Will or Trust include protections for the family? What assets go to the surviving spouse as surviving joint tenant? Do the decedent’s individual bank accounts, life insurance, annuities, and retirement plans go to the surviving spouse as designated death beneficiary?
In a probate, the California Probate Code provides Family Protections for the decedent’s surviving spouse and minor children against claims by the decedent’s creditors and heirs or beneficiaries under his will. The Probate Code’s Family Protections apply only to the decedent’s probate estate; they do not apply to any non probate assets, such as, trust assets, joint tenancy assets, and financial assets designating surviving death beneficiaries.
A spouse’s own family protections rights can be modified or waived in a pre or post marital agreement and terminate upon legal separation, dissolution of marriage and upon remarriage. The rights of minor children end when they become adults.
The decedent’s surviving spouse and minor children are entitled to immediate, albeit temporary, possession of the family dwelling and the decedent’s clothing, appliances, household furniture, tools and vehicles. Temporary possession ends sixty days after an inventory and appraisal of the decedent’s estate is filed in the probate proceedings, but can be extended by court order.
After filing the Inventory, the Probate Court may, at its discretion, then set-aside certain estate property for continued use by the surviving spouse and minors during the probate. The Probate Court may also grant a Family Allowance to be paid from the Probate estate.
Most importantly, the court may set-aside a suitable dwelling for the surviving spouse and/or minor children by creating a “Probate Homestead”.
In selecting a suitable dwelling and establishing the duration for the Probate Homestead, the Court balances various competing interests of the surviving spouse, the minor children, the decedent’s creditors, and the decedent’s heirs or beneficiaries under the decedent’s will. A surviving spouse and minor children are not required to be in the decedent’s will to receive a Probate Homestead.
With assets held in a Trust, the Trust provisions, and not the foregoing Probate Code family protections, apply. Any desired family protections must be contained in the Trust. The Trust may provide outright gifts, gifts to be held in further trust, and/or with temporary rights, like the right to remain in the decedent’s residence rent free for a certain period (e.g. while it is listed for sale) to the beneficiaries.
While a Probate Homestead can sometimes be more advantageous to the surviving family, well drafted family protections inside a Trust are usually more desirable: Neither a court petition nor the court’s discretion in selecting the property and dwelling to be set-aside are involved. The family protections to be provided are defined and approved prior to the decedent’s death and are more immediately available upon the decedent’s death, and may last longer.
The foregoing discussion is not legal advice. To protect your surviving dependents consult a licensed estate planning attorney for assistance.