Money Dilemmas

Meg Green: Second wife worries she’ll be left out of estate

 

Special to The Miami Herald

The dilemma: I’m a 65-year-old woman running scared about out-living my money.

I’m in a second marriage for 12 years, where he made it quite clear in his will that his whole estate will go to his daughter, who with her husband, has an annual income in the six figures. They are big spenders.

My net worth is $500,000 in my portfolio, mainly equities, a paid-for condo worth about $500,000 that’ll revert to me in case of his death, but is expensive to maintain. He collects max Social Security benefits (I’m not sure how much I’d get of that) and I collect $670 a month from which Medicare and all that is deducted. We both have long-term care policies, and I have a trust fund of $500,000 that pays me $50,000 a year, which means it won’t last forever.

I’m in very good health — and a very happy marriage — but who knows what the future brings? Every time I think of these things I practically fall apart from worries. It just seems unfair to see his whole estate (about $1.5 million) go to his daughter while I would probably not be able to enjoy the travels we’re doing now. We don’t have grandchildren (yet). Of my two children from my previous marriage the younger is financially settled, whereas the older is struggling.

I hope the above is enough for you to give me some “hope” in terms of my financial future. Like most women my age, I’ve never been able to express my worries to my husband. I think this is a universal issue for women like me. Any thoughts-guidance-ideas that you can offer are greatly appreciated.

Meg’s solution: .This is a universal issue, for men as well as women, and you’re not alone in your angst.

The reason he’s not leaving his wealth to you instead of his daughter is that he doesn’t want it to go to your kids … or a future partner. You didn’t mention if you were sharing in household expenses and/or paying for your own clothes, cosmetics and children’s gifts. That would make a difference in this equation, as it’s actually a 2013 version of what’s good for the goose is good for the gander. He’s not that much wealthier than you. Where would he be if you “left” first?

Should he predecease you, you would be entitled to his Social Security payments instead of your own. You could expect probably $2,000 and another $2,000 a month can come from your equities. You may want to access a reverse mortgage on the condo to help with expenses at that time.

But it may not support the life you’ve become accustomed to.

I would approach it by “turning the lights on.” Create an expense page to see what life may cost you if he wasn’t here. Get help if that’s not your bag, but you need to see if you could survive. If not, then address the shortfall like a business woman. Make it tangible. If your needs are for food and upkeep, there may be more sympathy than if it’s for lifestyle, although I would hope he’d want you to be OK. Let him know you’re scared, but certainly understand him wanting to leave his wealth to his daughter.

You’re looking for advice.

An estate attorney will tell you that he could leave a portion of his portfolio into an irrevocable trust to provide another $2,500 or $3,500 or so a month until you’re gone (or re-married) when it passes to his daughter. He could leave the rest outright to her so she would get a chunk of her inheritance upon his death.

But that takes discussion. See if you can go there, just the two of you in a relaxed setting. A bottle of wine might help. See how he feels. Attitude can tell a lot, but beware. A great many wealthy men (and women) look to preserve their wealth for their own family. A second wife doesn’t always constitute family to them, sometimes even after many years.

Understand it, but you don’t have to accept it if it’s terrorizing you. I know that’s not the answer you want, but sometimes that knowledge needs to be communicated, as in, “I’m your wife. That’s family.” If he rejects the concept, you have some serious thinking to do. But remember, very happy marriages are hard to come by. Good luck.

Got a dilemma? Email askmeg@meggreen.com. Meg Green, CFP, is a wealth manager with offices in Aventura. Her Money Dilemmas column runs monthly in The Miami Herald.

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