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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Huge Claims Resolved in Davidson Estate

When you die a billionaire, your estate is often going to be heavily litigated before a certificate of completion is filed with the probate court.  Particularly when your widow (and business partner) is not the mother of your children.

Another ingredient for guaranteed protracted probate litigation: last minute changes to your will.

Local billionaire Bill Davidson's estate had all of these characteristics.  After his death in March 2009, Davidson's estate was estimated at well-over a billion dollars.

Davidson parlayed his fortune from Guardian Industries, a glass company, into a sports empire that once included world-champions Detroit Pistons and Detroit Shock, as well as the Tampa Bay Lightning hockey team, and the Detroit Fury arena football team.

The estate and the $20 million claims filed against it, first denied but then eventually settled, are all on file with the Oakland County Probate Court.  The terms of the settlement, however, are not.

Apparently, the problem arose when Davidson made changes to his 19-page will during the last week of his life.  Those testamentary amendments broke-up Davidson's estate into three separate trusts and named his wife, a son and a daughter, all Bloomfield Hills residents, as the sole beneficiaries.

The probate litigants pitted Davidson's spouse and owner of the Detroit Pistons, Karen Davidson, against his son and daughter.   The dispute involved claims against the estate filed by Milestones Upgrading & Industries Co., an Israeli company, and Big Ben Investments; companies with which Mr. Davidson had a long business-relationship.

The claims filed by Milestones and Big Ben alleged that Mr. Davidson made up to $20 million in investment pledges to the companies.  Karen Davidson, listed as a manager for Big Ben, wanted her husband's estate to honor the pledges, saying they were consistent with Mr. Davidson's testamentary wishes.

In collateral "breach of contract" litigation assigned to Oakland Circuit Judge Nanci Grant, the corporate plaintiffs also privately settled the circuit court disputes via stipulated orders of dismissal in July.

While these large probate and circuit court disputes were being negotiated and resolved, you may recall rumors that Karen Davidson was shopping the Detroit Pistons for an interested purchaser.  Fortunately, the Davidson Estate has enough money to resolve the expensive claims made against it and to apparently keep the Pistons right where they are; in the suburbs of the "D".

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