Posted by Brian Redhead
It's rare that an inheritance passes from one generation to the next without leaving some scars. But smooth transitions are becoming even rarer thanks to the growing influence of a new player: the second spouse. As Americans live longer, they're more likely to move into second marriages, and legal experts and financial planners say the resulting friction with the kids is steadily mounting. In more cases grown children are going to court against their parents even while they're still alive, only to run up against a legal framework that leaves them with surprisingly few rights compared with their parents' new spouses. The once-sleepy field of trust and estates law is now brimming with hardened litigators. In Texas, personal-injury lawyers in search of big paydays have begun taking on will contests. And just as court squabbles are on the rise, so are prenups and sophisticated trusts that are designed to forestall them.
Naturally, there are more than bruised feelings at stake. The generation that’s growing old now is arguably the wealthiest in history, and many of their baby boomer kids are counting on inheriting some of their dough. But that legacy is under threat. The stock market’s nosedive and the housing slump have combined to wipe out $15.5 trillion in net worth in the last two years, according to the Federal Reserve. Along with this financial tumble, a growing number of would-be heirs face the biggest threat of all: a new stepmom or stepdad. According to a 2007 study by two Wharton professors, people over 65 are now more likely to be married than ever before, in large part because of a spike in late-in-life marriages. Even as the inheritance pie is shrinking, more family members are fighting for a piece of it.
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