Saturday, April 12, 2008

Estate Planning For A Second Marriage May Be Crucial. Update 12-28-11 ~by Legal Pub


If you are a supporter of MARRIAGE STRIKE or looking for humor, don't read the rest of this article! While estate planning prior to a second marriage could generate a lot of jokes, this article is intended to be truly educational. For students, yes it may be on a test, the test of real life in the school of hard knocks.

People are living longer and marrying later. Remarriages are becoming so common that potential estate problems could reach epidemic proportions. Estate planning with second marriage is crucial. One typically wants to provide for their new spouse, but at the same time, most want to also leave an inheritance for their children from their first marriage. Finding the right balance can prematurely cause one's death. So her are some suggestions that may help.

NEVER DIE
Well, perhaps that is not practical, but it certainly would avoid a lot of problems.

PREPARE A PRENUPTIAL AGREEMENT (ANTE NUPTIAL AGREEMENT)

In most states, a prenuptial agreement will be upheld. However, asking your spouse-to-be to sign a prenuptial agreement can be difficult. Despite being difficult, it's a practical, almost essential thing to do. A prenuptial agreement is not just for the wealthy. A well-executed prenuptial agreement is helpful in any case where both spouses already have children.
What can a prenuptial agreement do? A good written agreement can make it clear which are his expenses, her expenses and their expenses. Similarly, a prenuptial agreement can clearly outline what happens to each of his assets, her assets and their marital assets in the event of dissolution of marriage or death of one of the parties.

Perhaps an equally important advantage is the potential protection that a prenuptial agreement can bring. For example, an agreement can protect each spouse from the other's "ex" by specifying who owns which assets. It can also help protect premarital assets from suits by your new spouse's creditors and future creditors.

How do you make a prenuptial agreement? It is strongly recommended that you seek an attorney's advice. To maximize the likelihood that the agreement will be enforced, it is recommended that each party have a separate independent attorney. An agreement should fully disclose each spouse-to-be's financial condition. You need to plan ahead. If a prenuptial agreement is not signed before the wedding plans are made and the invitations have been sent, your spouse later could later claim that the agreement was only signed to avoid the embarrassment of canceling the wedding. A court could rule that such an agreement was invalid because it was signed under duress. It’s best to sign the prenuptial agreement at least three months before the wedding.

Is a prenuptial agreement a sure thing? Prenuptial agreements are often litigated. They may be overturned in a court if a court rules that a party was under duress or if a party committed fraud. The difficulty of overturning a prenuptial agreement varies from state to state. If both parties are represented by lawyers, it becomes unlikely that the prenuptial agreement will be overturned.

How do you discuss a prenuptial agreement with your future spouse? Perhaps the easiest way is to have your attorney, accountant or financial planner suggest the idea.
A selling point is that an agreement may protect both spouses and their respective children. Focus on the positives of protecting each other from outside claims.


MARITAL TRUSTS
Marital trusts (qualified terminable interest property (QTIP) trusts) can be used for estate planning. After the first spouse dies, assets go into a QTIP trust. The assets are invested in stocks, bonds, etc. The income (or a fixed percentage payment) from the trust goes only to the surviving spouse until his or her death. The trustee may invade the trust principal only under certain circumstances such as the surviving spouse having a critical need for additional money. After the surviving spouse dies, the trust assets pass to beneficiaries named by the first spouse to die, usually his children. Note: assets given to a QTIP trust may be subject to an estate tax at the survivor's death. They are generally not subject to an estate tax at the death of the first spouse.


INSURANCE
A married couple can purchase insurance naming their children as beneficiaries.

REAL ESTATE CONCERNS
Should the new family home be held jointly or kept in the name of the original owner?
If there is joint ownership with right of survivorship, the surviving spouse automatically will inherit the home. The original owner's children will not inherit any equity in the jointly owned home. A trust could own the home and provide a life estate to the surviving spouse and a remainder to the children. The surviving spouse will typically be responsible for the home's maintenance, insurance, property taxes, etc., as long as she lives.

WILLS
Even with the above planning, one still needs a will. Make sure your IRA, life insurance, transfer-on-death bank accounts, etc., are going where they're supposed to go. If such plans have specific beneficiaries, they will typically automatically transfer such ownership to the beneficiary irrespective of the will. Couples also need to decide who will have power of attorney in the event of their illness or inability to control their own finances. Wills can serve as the mechanism to transfer any asset that does not automatically pass to another upon your death.

SUMMARY
For those readers wanting to know more, consult your local attorney. Estate planning can be essential if you desire a smooth transition at your death without a "family feud."

Update 12-28-11: A 2010 poll by Harris Interactive reveals that prenuptial agreements are three times as common as they were in 2002. Even folks of relatively modest means are want ways to limit the financial downside of divorce. This remains especially true for those who are remarrying.

58 comments:

Anonymous said...

I tuned in to get a joke and I got an education. I got some planning to do before next April's big date!

california surfer dude said...

Better then the education I got after my first marriage ended in divorce.

I got a used woody and she got the house. I got pocket change from aluminum cans and she got the checking account.

I could have had the dog, but she thought it would be cruel for the dog to live in the woody. Course she had no problem with me living in the woody...

Surfer Dude

Anonymous said...

Wow, I feel like a lawyer now.

Ms Calabaza said...

Too bad most people don't want to deal with all of this because it sure would prevent a lot of feuding later. Great advice but it kinda reminds me of preventive medicine in that it makes sense but people really rather avoid it.

Surfer Dude, I hope you were joking!?!

california surfer dude said...

No joking here...

Surfer Dude

U.P. said...

I feel much dumber for remarrying without the above.

Anonymous said...

How about an article for same sex unions?


Bertha

bertha said...

Thank You! Kind of surprising that you funny but conservative religious supporting folks allowed this topic. Again, sincerely, thank you for bringing our problems out of the closet into the light.

Bertha

Anonymous said...

Did Phillip Smith do enough estate planning? How could he have anticipated his wifes all out assault of his character on YOUTube?

Anonymous said...

Thanks

Anonymous said...

This really was very helpful ideas. Better see a lawyer before the minister!

Anonymous said...

What if I am marrying a lawyer who is a minister?

Anonymous said...

To 4-29-08, then I really feel sorry for you!

Anonymous said...

This was really helpful.

Anonymous said...

Cool.

Anonymous said...

Just stay single!

Anonymous said...

Prenupts should be mandatory in states where they are legal!

Anonymous said...

Wow, lawyers that can explain things in English. Thanks!

Anonymous said...

Put everything in trusts before you marry again!

Anonymous said...

Just trust me when you marry me...

Then when I divorce your @ss, I will give you back the few crumbs that I don't want.

Chris

It's Fine How It Is said...

I am getting married in 4 months to a guy who is older than me, owns his own business (he is a dentist), has been married before and got screwed and has 2 young children and he wants me to sign a prenup. I understand his point of view, however, I feel that by doing this it means that he has no faith in our relationship/marriage and it is an open invitation to get divorced. I don't like planning for a divorce when I am not even married. this is my first marriage. I am 30 years old, I have a great deal of money from an inheritance, but I am not concerned. In a few months we will make a vow to eachother to love one another until death. I know in this world, divorces happen all the time. I just don't envision it happening to me...maybe i am naive. How do I take the emotional part out of all this? He says he loves me, but then wants a prenup?

law dog said...

Fiance...

There are some suggestions in the comments to take the emotion out of it. But here are a few points.

One see a lawyer.

Two, have a clause that if he dies and you are still married, that you get full rights of inheritance.

Three exclude from the marital assets your inheritance.

Four think of it as an aid to a amicable ending to the contract just in case...


Law Dog

Anonymous said...

Prenuptials just plain make sense. They take some of the uncertainty out of marriage.

Viper said...

Madonna and Guy Ritchie may be calling it quits. If so, the lack of a prenuptial agreement may cost Madonna millions! Paul McCartney was ordered to pay Heather Mills $48.7 million because he neglected to have a prenuptial agreement.

You don't need to be rich to need a pre-nup. If you bring assets into a marriage, it is best to have a prenuptial agreement in case things don't work out. Get a pre-nuptial agreement before you marry.

Anonymous said...

Thinking about tieing the knot a second time? See a shrink. You are nuts!

california surfer dude said...

I was cursed. So I went to see a witch doctor to remove the curse. He told me it was very important to know the exact words of the curse. I told him that was easy to remember. The words were, "I DO."

Surfer Dude

Anonymous said...

Oh Surfer Dude, let's see how smart you are:

What is the shortest sentence in the english language?

A: I am.

what is the longest sentence?

A: I do!

It is a fricken death sentence for most men. Marriage strike Dude!

Anonymous said...

Good blend of information and humor. This may be the blog of the year.

Anonymous said...

Whether you have a casual interest in Estate Planning or you are fanatical about finding out all you can, we've got all that you need right here.

Anonymous said...

Married men have been getting some on the side dating back as far as as 2,000 years. The saying is: Prostitution is the oldest profession.There's a reason behind that.........(ie marriage)

Mini

Anonymous said...

This is too kind to give us this advice for free. Thanks again.

Anonymous said...

This is too kind to give us this advice for free. Thanks again.

Anonymous said...

Better advice is just to stay single!

Anonymous said...

1. If you can't stay single, see a lawyer for a prenup.

2. Even with a prenup, proect as many assets as you can by putting them in a trust.

Anonymous said...

What woman can you trust, even with a trust?

Anonymous said...

Trust your lawyer to come up with the best plan possible and then keep your fingers crossed.

tom2000 said...

This is really good to see articles in this topic...
Students must work as part time.. It will improve their knowledge as well as their confident...

Tom

estate planning

Estate planning San Diego said...

A prenuptial agreement may be hard to discuss, but it can prevent problems further down the road with the family from the first marriage and the second.

Anonymous said...

Such discussions are necessary evils!

Legal Pub said...

Prenuptial Agreements are generally valid in all 50 states and the District of Columbia. Whether the state is a community property state or an equitable distribution state does not matter for purposes of a prenuptial agreement. Since 1983, 26 states have enacted a variation of the Uniform Premarital Agreement Act. The UPAA encourages the enforcement of prenuptial agreements. The exact UPAA standards differ from state to state. Consult a local attorney and/or your state Bar Association for details.

The UPAA has been adopted in Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Maine, Minnesota, Montana, Nebraska, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Rhode Island, South Dakota, Texas, Utah, and Virginia.

Viper said...

A prenuptial agreement should include a discussion with your lawyer and your prospective spouse the following:

1. List of both parties complete assets, liabilities, income, and expectations of gifts and inheritances.
2. A description of how premarital and post marital debts will be paid.
3. A clear explanation of what is to happen to your premarital property in reference to appreciation, gains, income, rentals, dividends and proceeds of such property- in the event of death or divorce.
4. An explanation of understanding as to who will own the marital residence and secondary homes in the event of death or divorce.
5. A detailed explanation as to how gifts, inheritances, and trusts either spouse receives or benefits from, whether before or after marriage are to be handled in the event of death or divorce.

6. An explanation of what will happen to each type of property, whether jointly or individually owned, such as real estate, artwork and jewelry in the event of divorce or death.

7. An agreement as to alimony, maintenance, or spousal support, or provide for a waiver or property settlement instead of support (to the extent allowable by law).

8. Detail death benefits, stating how you will provide for your spouce in your will.

9. A description of what will happen in the event of medical, disability, life and the payment for and use of long-term-care insurance coverage.

This list is not all inclusive but it should give you a good start.

Anonymous said...

Thanks viper!

Anonymous said...

Guy
You have got to see this. Obama playing on XBox. Funniest video ever. http://bit.ly/bllhx1

Anonymous said...

The relevancy to estate planning?

Anonymous said...

Plan to avoid a disaster!

Lawyer Who Should Have Known Better said...

Legal Pub, you are so right! I a firm believer in prenuptial agreements for anyone with a business or for any one entering a second marriage.

A family business won't work if it is divided. Similarly, if you think children squabble over settling an estate, try adding stepchildren to the mix!

Legal Pub said...

Don't make the mistake Kesley Grammer apparently made. He and Camille apparently did not have a prenuptial agreement. Now the divorce has the potential to make World War II look like a minor disagreement.


See: http://www.popeater.com/2010/07/15/kelsey-grammer-prenup/

Anonymous said...

Donatacci is a 41-year-old hottie. She used to be a Playboy model and dancer. Donatacci wants joint legal and physical custody of their children, 9-year-old daughter Mason and 6-year-old son Jude. She married the Grammer in 1997. The met at a party thrown by MTV. They married a year later.

Mike Clark said...

Estate planning is indeed very important primarily because assets need to be allocated well for the beneficiaries. In the case of second marriages, two sets of beneficiaries need to be considered: the children in the first marriage and the spouse for the second marriage. I agree that appropriate legal action like prenuptial agreements must be made to ensure that all bases are covered.

Such contracts should be drafted by credible estate lawyers. In Ottawa and other places, their expertise are used in wealth management and on issues like property distribution. Estate lawyers (Ottawa and other places) can best represent the client in courts. That's why a lot of people consult them for purposes of expediency.

Very informative post. Thanks!

Anonymous said...

Good plug, Mike.

Anonymous said...

Wish I had read this before I got married a second time!

Anonymous said...

Every one ought to explore a prenup before tieing the knot. Better safe than sorry.

Anonymous said...

I would video tape the signing of the prenup so that it is documented the state of mind of the parties.

Anonymous said...

Is it permissible for an attorney to pay to advertise on this post? If so, how do we go about doing it?

Legal Pub said...

Update 12-28-11: A 2010 poll by Harris Interactive reveals that prenuptial agreements are three times as common as they were in 2002. Even folks of relatively modest means are want ways to limit the financial downside of divorce. This remains especially true for those who are remarrying.

Legal Pub said...

To Anon: questions concerning possible sponsorships of certain articles in exchange for a link can be addressed to legalpub@legalpub.net.

Anonymous said...

Great resource. Thanks for the information. I definitely will consult a lawyer before tieing the knot!

Fearless Woman said...

Here is a sample prenuptial that many women would like to see:

Please sign,
THE UNDERSIGNED, HEARBY AGREE:

1. In the event wife does not have an orgasm after Husband drunkenly rolled on top and pumps for three minutes, wheezing like an emphysema victim, wife shall fake one.

2. I fully understand that everything negative that happens in this world is wifes fault. Thus since wife has already taken the blame for everything, Husband shall never bring the subject up.

3. After sex, wife shall not request compensation for hazardous duty pay; however, husband shall voluntarily increase the household budget by 15% to compensate for the extra cost of tylenol and disinfectent.

4. After we split up, wife shall have the right and duty to say that husband "ruined me for other men".

5. Wife shall have exclusive control of all tv remote controls except for any such device in the laundry room where Husband is welcome to have at it; provided husband actually do the laundry.

Signed ______________________________________________________________________

Date ______________________________________