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As people live longer, second and third marriages become increasingly common, creating the potential for uncharted legal and emotional challenges. Most of the time both parties will bring property into the marriage and each spouse will usually have an understandable desire to protect the children from his or her first marriage. This can create a conflict with the sense of long-term security for the new spouse.
The problem can be further complicated when a family business is involved. If a spouse’s children have been long-time participants in the business, they will usually have a sense of ownership of the goodwill, and entitlement to continued involvement in the business based on the years helping the parent build the business.
Alternatively, if the new spouse becomes actively involved he/she may acquire the sense of ownership and/or entitlement. The new spouse may also become jointly liable for the tax consequences of the business, whether or not he/she has an active hand in the operation. Suppose the spouse who principally operates the business should die unexpectedly? If the business is doing well, it is essential to have planned in advance so that operations continue with as little breach of continuity as possible. It takes a lot less time to destroy the value of a business than it did to build it. What if the business is doing poorly? That may make it all the more important to protect the surviving spouse who might be facing tax liability, along with demands from employees, vendors, the business landlord, etc.
The worst possible type of estate planning in this situation is to have done nothing! None of us know what the next five minutes hold, let alone five years, and a well-thought-out succession plan is not created overnight. A skilled lawyer will need to ask questions about the business, the relative skills of the players involved, and the family dynamics — particularly where a second marriage is involved.
There is a Shakespeare line “A fool go with thy soul, whither it goes” — in other words “you deserve to wear a dunce cap wherever you spend eternity.” Do not let this be your epitaph! None of us like to give thought to our loved ones going on without us, but the consequences of not planning can be devastating. The best “final gift” that any of us can leave those around us, particularly a trusting spouse, is to have our affairs in order so that if an unexpected tragedy occurs, the children and/or spouse will not be arguing over “what Dad intended” or paying their respective attorneys several hundred dollars an hour to fight over assets that are rapidly losing value.Read more
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