Preparing for a Second Marriage

Many factors affect whether a second marriage will last: the relative age and incomes of the partners, whether either party has children, cohabitation prior to the second nuptials, and the education level of the parties.

And, of course, how could we forget the personality of the ex-spouse; perhaps the most important factor of all.

According to statistics published by the National Institute of Health, approximately 15% of second marriages end within 3-years; and 23% end within 5-years.  Overall, however, the divorce rate for second marriages has drawn even with that of first marriages; about 40%.  Also, in its 2009 report Marital Events of Americans, the Census Bureau claims first marriages last, on average, about as long as second marriages: about 8-years.

Here are some things to think about, and some steps to consider, before tying the knot for the second time.

Prenuptial Agreement.
For those with assets, this document is a must.  To be enforceable, the prenuptial agreement largely depends on two things: a) full disclosure by both parties of all their respective assets; and b) legal representation of each party by separate lawyers.  If your partner does not want to sign such an agreement, then you should seriously consider cohabitation rather than marriage.  This is a harbinger of trouble in the event of a split.

Couples with only modest estates going into second marriages generally do not need the complication of a prenuptial agreement.  If a marital estate grows during the second marriage, that estate will be subject to an equitable property division in the event of divorce.

Solid Estate Planning.
Prior to a second marriage, assets may be transferred into a trust for the benefit of the owner's children.  Also, retirement asset rollovers (from a 401(k) plan into an IRA, for example) can operate to protect the new spouse with survivor benefits, or not, as the case may be.

A Qualified Terminable Interest Property trust (QTIP) typically provides for interest income going to a surviving (second) spouse, with the principle going to the settlor's children from her first marriage upon the death of the second spouse.

Children from a prior marriage can also be provided for using an Irrevocable Life Insurance Trust.  This way, the new spouse can be designated as the beneficiary on the person's retirement assets and the children are designated beneficiaries of the death benefit from the life insurance policy.

Another common practice is to create a separate trust to provide for the distribution of separate property to the children from the first marriages and to create a joint trust to provide for the distribution of the marital estate of the second marriage.

Good Premarital Counseling.
One of the best things a couple can do prior to tying the second knot is to participate in joint counseling.  This should include religious counseling or premarital couples therapy, financial advice, and (separate) legal consultation.  Once separate legal counsel is received, the couple can certainly compare notes in order to get on the same page.

Going into a second marriage with your eyes open improves the chances of a successful nuptials.  When selecting an attorney to assist you with the necessary planning, find one that truly listens to your expressed wishes and pays close attention to the characteristics of your estate.

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Posted in: divorce,estate planning,family law lawyer,marital estate,marital property,second marriage,trust

SCOTUS Reprise: Stripper's Estate Gets Second Oral Argument

Money isn't everything, right.  Yet here is SCOTUS, taking a close second look at the money.

A case involving a Texas Billionaire's massive estate and a washed-up model turned stripper is on the SCOTUS docket for oral argument today, for the second time.  You recall this case.

The estate of former Guess Jeans model whose, er, "married" name was Vickie Lynn Marshall, and who worked under the name Anna Nicole Smith, has carried on the lawsuit she filed shortly after J. Howard's death in 1995 at age 90.

Plenty of eyebrows were raised and family feathers ruffled in 1994 when Mr. Marshall took Smith as his third wife.  Then he died and the lawsuits began.

And these lawsuits have just not stopped, despite (and perhaps because of) the fact that all the litigants have died.  Anna Nicole Smith died in a drug overdose in 2007, shortly after the U.S. Supreme Court reversed an unfavorable decision for Smith issued by the U.S. Court of Appeals for the Ninth Circuit.

The case involves the scope of federal jurisdiction, eventually engulfing three separate court systems. At his death, Marshall had long established a trust estate plan leaving everything to his son, E. Pierce Marshall, who was also named trustee of the trusts.  Smith contested the trust plan, asserting that Marshall told her he would leave a portion of his estate to Smith.

What would have been a simple, although large, Texas county probate tussle went federal when Ms. Smith was hit with a default-judgment for, of all things, sexual harassment.  She filed for bankruptcy in California and her deceased husband's trustee-son claimed non-dischargability along with libel for statements Smith allegedly made against the decedent.  Smith counter claimed in the bankruptcy court for interference with her husband's estate plan.

Now hang with me on this....

The federal bankruptcy court not only dismissed the trustee's claim, it awarded Smith nearly half a billion dollars on her counter claim, finding that Marshall's son did interfere with his father's testamentary wishes.  This ruling was taken to the U.S. District Court where Smith's award was reduced to a paltry $88 million.

In the meantime, in an entirely separate proceeding, a Texas probate jury found that the decedent's estate plan was valid, ruling against Smith.  These decisions were then considered by the Ninth Circuit who invalidated the federal district court's award to Smith, holding that the Texas probate court had exclusive jurisdiction over such matters.

SCOTUS disagreed back in 2006, reversing the Ninth Circuit and holding that some issues tainted by state probate court could legitimately find their way into federal court via a properly raised bankruptcy-related issue; i.e. Smith's counterclaim.  The High Court then remanded the case back to the Ninth Circuit for a determination on the merits of that claim.

On those said merits, the Ninth Circuit again ruled against the stripper.  Again, the stripper, this time through her estate because she had died, appealed to SCOTUS who once again granted certiorari.  Responding to her claims is the estate of E. Pierce Marshall, who died shortly after Smith.

And now, viola, oral argument, chapter two is here today.  Stay tuned for the result.

This time, the issue concerns the very nature of federal jurisdiction and the constitutional powers (under Article II of the Constitution) of the federal courts; delving even deeper into that subject than the first go around. For a more detailed analysis of this case, SCOTUS expert Lyle Denniston has put together an excellent oral argument "recap" published on the SCOTUSblog.

Regardless of how the High Court rules, the lesson we take away from this suit is that money drives the bulk of all litigation.  Sometimes justice is just roadkill in the process.

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Posted in: Anna Nicole Smith,bankruptcy,constitution,J. Howard Marshall,Lyle Denniston,probate court litigation,SCOTUS,trust,trustee

Macomb Woman Obtains Divorce From the Grave

In a recent case originating from Macomb County, the Michigan Supreme Court held that a woman, scorned by her long-time but absentee husband, could effectively divorce him from her grave. The case, Tkachik v Mandeville, reversed the Court of Appeals' decision that ruled she could not do so.

In this case, the wife became ill and died of breast cancer after nearly three decades of marriage. Although the long-married couple was estranged at the time of wife’s death, they never filed for divorce or legal separation (known as separate maintenance in Michigan).

Because her husband had abandoned her during the 18-months she battled breast cancer, the wife executed a trust and will which left him nothing and appointed her sister as personal representative of her estate. At the time she died in 2002, the wife had spent years maintaining the “marital home” as well as a vacation property near West Branch. She paid all the property-related expenses without contribution from her husband.

Six-months after his wife’s death, the husband filed a petition in the Macomb Probate Court to set aside his deceased wife’s will and trust and to remove the cloud his wife placed on their marital properties. In the resulting probate court battle, the wife’s sister, relying almost extensively on out-of-state caselaw, asserted equitable contribution and abandonment theories, arguing that allowing husband to posthumously reap the benefits of his deceased spouse’s labors amounted to an unjust enrichment.

The sister was granted summary disposition and the Husband's challenge to his deceased wife's will and estate plan was thrown out of the Macomb County Probate Court.  In doing so, the probate court made a finding that Husband should not be considered a "surviving spouse" because he had abandoned his wife for more than a year.

Next, the sister went on the attack, suing her former brother-in-law on behalf of her sister's estate and seeking a determination that the probate court's finding (i.e. that Husband was not a "surviving spouse") destroyed the "tenancy by the entireties"; the mode of ownership of the former marital home.

When that didn't work, the sister amended her complaint to seek contribution from the Husband for Wife's sole maintenance of the properties.

The Court of Appeals was not persuaded by the sister's legal arguments in equity, deciding that a married person cannot execute an estate plan that effectively acts as a “posthumous divorce”. The appellate court’s ruling emphasized the sanctity of marital property intact and declined to “invent a claim” from which a decedent spouse can reach her surviving husband from her grave.

In reversing the intermediate appellate court, the Supreme Court extended the doctrine of contribution to find Husband liable for his portion of the maintenance of the property.  The high court was persuaded to fashion an equitable remedy where Sister had no remedy at law.

Essentially, the Supreme Court found that Husband had been unjustly enriched by reaping the benefits of his wife's maintenance and improvements to the properties, while contributing nothing.

The case is illustrative of how our court system processes a case.  The initial decision is never final.  In this case, the sister's case went all the way to the Michigan Supreme Court; went back down to the Court of Appeals for an opinion after that court passed on the case; then went back up to the Supremes.

After its epic journey, this case is binding common law and will determine the result for other subsequent and similar cases.  Lesson: if your spouse abandons you with ongoing obligations, he or she may be liable, either in family or probate court, for past maintenance and the cost of  improvements on an equitable contribution theory.

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Posted in: abandonment,attorney,decedent,equitable contribution,Macomb Probate Court,Michigan Court of Appeals,Michigan Supreme Court,Surviving Spouse,trust,unjust enrichment,will