'Keep It Separate': Suze Orman Warns Listener About Protecting Her Children's Inheritance When Buying A Home With A New Spouse

Personal finance expert Suze Orman recently addressed a listener's question about protecting her financial assets for her children during a second marriage. On a recent episode of the Women & Money podcast, Orman provided advice to Susan, who is navigating financial decisions after marrying her high school sweetheart at age 67. 

Susan explained her situation: she's selling a home in California that she inherited from her mother and expects a $700,000 profit. 

"I may invest 200 to 300,000 of it in our eventual second home," Susan wrote. "If we sell his home as well, my plan is that we will both contribute equal amounts to the new home. The rest I would like to put in a combination of Alliant CDs and maybe a Vanguard VOO."

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Susan and her husband have children from previous marriages and they want to ensure that their respective children inherit their individual assets. 

Orman acknowledged Susan's heartfelt story but emphasized safeguarding her children's inheritance. One of Orman's main recommendations was to avoid titling the property as joint tenants with right of survivorship. 

"If you were to die, your half automatically goes to him," Orman said. "How you hold title to property overrides the wishes of your trust, your will, his trust and his will." This would potentially leave Susan's children disinherited from her assets tied to the home. 

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Instead, Orman recommended holding the property as tenants in common, a structure that allows each spouse to specify how their share of the property will be distributed upon their death. Through a trust, Orman explained that Susan could ensure her portion of the property goes to her children while her husband's share goes to his children. 

Orman also suggested adding a life estate clause in the trust. This would grant the surviving spouse the right to live in the property for the remainder of their life while preserving the ultimate inheritance for the children.

Regarding the remaining $400,000 to $500,000 from Susan's home sale, Orman advised prioritizing safety and liquidity. She suggested a combination of Alliant Credit Union CDs, Treasury notes or a government money market account at Schwab. These options align with Susan's goal of keeping the funds secure and accessible while earning modest returns.

For those considering growth investments, Orman recommended caution, suggesting Susan wait until she has more clarity about her long-term financial needs.

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Orman's advice highlights a broader financial principle: in blended families, it's essential to structure asset ownership carefully to preserve inheritance plans. Even in the happiest of marriages, misunderstandings or legal oversights can lead to unintended consequences.

By maintaining separate accounts and clearly defining ownership through a trust or legal agreement, couples can honor their commitments to each other while protecting their children's financial future.

While Susan's situation is unique, Orman's advice resonates with many older adults navigating second marriages. Open communication, proper estate planning and the right financial strategies can ensure everyone involved – spouses and children alike – benefits from clarity and fairness.

For those facing similar decisions, consulting with a financial advisor or estate planning attorney can provide personalized guidance and peace of mind.

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