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Estates & Wills & Trusts

Second marriage estate planning can lead to conflicts

By Charles Ticker

A recent story in the New Zealand Herald reveals some of the estate planning challenges that can arise following a second marriage.

It involves the allocation of funds in the estate of a respected judge in New Zealand, Justice Sir Robert Chambers. He passed away in 2013 leaving behind his second wife, Lady Deborah Chambers, his two sons from his first marriage, and his two stepdaughters.

One of his sons is David Chambers who lives in the United States. The dispute appears to be over the allocation of the estate of Justice Chambers, which had a net value of around $12 million at the time of his death. David Chambers’ position is that he should receive $2.5 million as an enforceable entitlement as a result of an agreement between Justice Chambers and his second wife Lady Chambers. He had sought payment from Lady Chambers only to be refused.

Her position is that the $2.5 million entitlement was to be secured until her own death. Furthermore, she believes that Justice Chambers’ intention was for either spouse to be able to use the assets of the estate if either one of them passed away. In other words, she has discretion as to when she should pay out the funds. David Chambers is believed to be asking for an order to be paid the $2.5 million. None of the allegations have been proven in court.

This case illustrates some of the issues that may arise as a result of a second marriage. Indeed, studies have shown that there is an increased potential for estate disputes in blended families involving step-parents and step-children.

The succession plan after a second marriage must ensure that all parties’ potential interests are addressed and the timing and distribution of all estate assets are laid out in an unambiguous manner. The goal should be to have a succession plan that succinctly outlines the last wishes of the testator while at the same time leaving as little room as possible for dispute. If the estate plan following a second marriage is inadequate or open to dispute, estate litigation may ensue. This can cause serious delays in the administration of the estate and the distribution of assets.

The matter is further complicated if any of the beneficiaries, such as David Chambers in the above example, stand to receive significant sums from the estate. The parties usually become entrenched in their positions and look to the court to resolve the dispute. Involving the court through a will challenge significantly increases the costs and delays associated with administering the estate. The parties to the dispute should be aware of this and should strive to reach an amicable and timely resolution.

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