Category: Blended Families

Prenup is a Useful Tool in Estate Planning

Prenup is a Useful Tool in Estate Planning

A Prenup is a useful tool in your estate planning. Forbes’ recent article entitled “Prenuptial Agreement: What Is A Prenup & How Do I Get One?” explains that a prenup contemplates the end of the marriage, so the couple can divide assets with an objective mindset. A prenup can even help protect a business.

Prenups allow you to determine if alimony will be due if the marriage ends, as well as the amount and terms of those payments. A prenup can also say what kind of bequests you leave to each other in your will. It can also be good for couples trying to keep separate significant pieces of personal property, including future inheritances and other anticipated income. This is common for couples with a significant age or wealth difference and among older or remarrying couples.

Prenups Aren’t Just for the Very Wealthy. A Prenup can be a useful tool for almost everyone’s estate planning.

Protect Family Heirlooms. If you have a family heirloom and want to make sure that if your marriage ends, you’ll get to keep it, you can draft a prenuptial agreement that states the family heirloom is yours.

Pass Property to Children from Prior Marriages. A prenup can be used to establish property rights for second marriages. If you have children from a previous marriage, you can protect their interests in your assets and property.

Clarify Financial Rights. Prenups can help you decide now how assets will be split up instead of waiting until divorce proceedings. While divorce may never come, determining the financial distribution now saves time and headache.

Debt Protection. Prenups also provide debt protection. Some people enter a marriage with substantial financial debts or student loan debt. For couples in this situation, they can sign a prenup and clarify that those debts remain the separate responsibility of the spouse who incurred them. They can also decide how debts incurred during the marriage will be handled.

Avoid Emotional Arguments. The end of a marriage and divorce is emotional. It can be an overwhelming and upsetting process. When you’re negotiating with your spouse about assets, tempers can cloud your judgment about asset distribution. Contemplating these items with a clearer head is better for all.

Take time to consider how you want to craft a prenup. It can have a significant impact on your assets and your goals for your heirs. If you would like to read more about prenups and other forms of asset protection, please visit our previous posts. 

Reference: Forbes (Oct. 24, 2022) “Prenuptial Agreement: What Is A Prenup & How Do I Get One?”

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Steps to Avoid Inheritance Conflicts

Steps to Avoid Inheritance Conflicts

In this case, one brother left New York and had nothing to do with his brother for the rest of their lives. Uneven inheritances almost always lead to poor feelings between siblings, says a recent article “Where There’s a Will, There Can Be a War” from Next Avenue. There are steps to avoid inheritance conflicts.

Wills have a way of frustrating a basic desire for equal treatment among siblings. If an older sibling works in the family business and receives full control of it in the will, siblings who inherit non-voting stock are likely to feel slighted, even if they never set foot in the business. Can this be avoided?

There are a few ways to avoid this kind of outcome. One option is to name each child as a beneficiary of a life insurance policy equal to the value of the stock passed to the oldest child. In this way, all children will feel they have been fairly treated.

If one child lives closest to the parents and takes on their care in their later years, the parents often leave this child the majority of their estate. It would be helpful for parents to explain this to the other siblings, so they understand why this has been done. A family meeting in person or online to explain the parent’s decision may be helpful. This gives the children time to process the information. Learning it for the first time after the parents die can be a surprise. Combining the surprise with grief is never a good idea.

For some families, an estate planning attorney can be helpful to serve as a mediator and/or buffer when this news is shared.

In some states, wills and trusts can include no-contest clauses. These forbid beneficiaries to receive any inheritance, if they challenge the will after the death of the parent. If one child receives more than another child, the other child could lose the smaller amount if they contest the will. Some attorneys recommend leaving the children enough to make it worth their while not to engage in litigation.

When unequal is fair. There are times when uneven inheritances are entirely fair. One child may have a substance abuse issue, or one may earn a six-figure salary while the other is eking out a living in a low-paying position. The parents may wish to leave more to a struggling family member and the other child may actually be relieved because the sibling will not need their financial assistance. A conversation with the family may eliminate confusion and clarify intent.

In all cases, the heirs and those who expect to be heirs must remember the estate planning attorney who creates the will or trust works for the parent and not for them. It’s the estate planning attorney’s role to counsel their clients, which they can do best if they have the complete picture of how the family dynamics operate. Consider these steps to avoid a major conflict between siblings over an inheritance. If you would like to learn more about inheritance planning, please visit our previous posts.

Reference: Next Avenue (Oct. 13, 2022) “Where There’s a Will, There Can Be a War”

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The Estate of The Union Season 2 Episode 3 is out now!

The Estate of The Union Season 2, Episode 3 – Mis-Titled Assets Can Wreck Your Planning is out now!

Almost everyone thinks that once they have a Will or Living trust in place, they are set when the unthinkable happens.  Unfortunately, that ain’t always so!

The way in which you take title to assets can affect your estate, taxes and perhaps the disposition of the asset if a couple divorces. In our latest edition of our Podcast, The Estate of the Union, Brad Wiewel explores what MUST happen behind the scenes to make the estate plan happen! It’s not just the documents, it’s aligning your assets with the plan – which is called “Funding.” And if this part gets screwed-up, it’s a train wreck that may happen the minute someone passes away or becomes incapacitated.

We’ve got sixteen other episodes posted and more to come. We hope you will enjoy them enough to share it with others. These are available on Apple, Spotify and other podcast outlets.

In each episode of The Estate of The Union podcast, host and lawyer Brad Wiewel will give valuable insights into the confusing world of estate planning, making an often daunting subject easier to understand. It is Estate Planning Made Simple! The Estate of The Union Season 2, Episode 3  – Mis-Titled Assets Can Wreck Your Planning can be found on Spotify, Apple podcasts, or anywhere you get your podcasts. If you would prefer to watch the video version, please visit our YouTube page. Please click on the link below to listen to the new installment of The Estate of The Union podcast. We hope you enjoy it.

The Estate of The Union Season 2, Episode 3 – Mis-Titled Assets Can Wreck Your Planning out now!

Texas Trust Law focuses its practice exclusively in the area of wills, probate, estate planning, asset protection, and special needs planning. Brad Wiewel is Board Certified in Estate Planning and Probate Law by the Texas Board of Legal Specialization. We provide estate planning services, asset protection planning, business planning, and retirement exit strategies.

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Estate Planning is critical for Blended Families

Today, a blended family is more common than ever, with stepfamily members, half-siblings, former spouses, new spouses and every combination of parents, children and partners imaginable. Traditional estate planning, including wills and non-probate tools like transfer on death (TOD) documents, as valuable as they are, may not be enough for the blended family, advises a recent article titled “Legal-Ease: Hers, his and ours—blended family estate planning” from limaohio.com. Estate planning is critical for blended families.

Not too long ago, when most people didn’t take advantage of the power of trusts, couples often went for estate plans with “mirror” wills, even those with children from prior marriages. Their wills basically said each spouse would leave the other spouse everything. This will would be accompanied by a contract stating neither would change their will for the rest of their lives. If there was a subsequent marriage after one spouse passed, this led to problems for the new couple, since the surviving spouse was legally bound not to change their will.

As an illustration, Bob has three children from his first marriage and Sue has two kids from her first marriage. They marry and have two children of their own. Their wills stipulate they’ll leave each other everything when the first one dies. There may have been some specific language about what would happen to the children from the first marriages, but just as likely this would not have been addressed.

It sounds practical enough, but in this situation, the children from the first spouse to die were at risk of being disinherited, unless plans were made for them to inherit from their biological parent.

Todays’ blended family benefits from the use of trusts, which are designed to protect each spouse, their children and any child or children they have together. There are a number of different kinds of trusts for use by spouses only to protect children and surviving spouses.

Trust law requires the trustee—the person who is in charge of administering the trust—to give a copy of the trust to each beneficiary. The trustee is also required to provide updates to beneficiaries about the assets in the trust.

A surviving spouse will most likely serve as the trustee when the first spouse passes and will have a legal responsibility to honor the shared wishes of the first spouse to pass.

If you and your new spouse have created a blended family, it is critical to evaluate your estate planning. Your estate planning attorney will be able to explain the many different types of spousal trusts, and which is best for your situation. If you would like to learn more about estate planning for blended families, please visit our previous posts. 

Reference: limaohio.com (Aug. 20, 2022) “Legal-Ease: Hers, his and ours—blended family estate planning”

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Way you Title Assets has an Impact on your Estate

Way you Title Assets has an Impact on your Estate

The way you title your assets has an impact on your estate plan. FedWeek’s recent article entitled “How Assets Are Titled Can Make a Big Difference discusses the different ways property may be titled, and the significance of each one.

The way in which you take title to assets can affect your estate, taxes and perhaps the disposition of the asset if a couple divorces. Many couples want assets to be titled simply in the event something happens to one, so the other spouse can take possession immediately without taxes or complications. Joint ownership may be the simplest way to meet most of these objectives. However, this can get complicated if any number of things happen, such as divorce, second marriage, children from multiple marriages, adoption and blended families of all types.

It’s critical to be educated on the different types of ownership, so you know when a change may be needed. Here are the main options:

Holding Assets in Your Own Name is simple and inexpensive. However, if you become incompetent, those assets might be mismanaged. At your death, individually owned assets may have to go through probate.

Joint Tenants with Right of Survivorship is when one co-owner dies, all assets held this way automatically pass to the survivor. One joint owner can take over if the other is incapacitated, and jointly held assets don’t go through probate.

Tenants in Common means there’s a divided interest, although none of the owners may claim to own a specific part of the property. At the death of one of the joint owners, the share owned by the deceased must pass through their will to determine ownership. The surviving joint owner doesn’t automatically own the entirety of assets.

Tenancy by the Entirety is a type of joint ownership similar to rights of survivorship for married couples. It lets spouses own property together as a single legal entity. Ownership can’t be separated, which means creditors of an individual spouse may not attach and sell the property. Only creditors of the couple may make claims against the property.

With Entity Ownership, you might create a trust, a partnership (such as a family limited partnership), or a limited liability company (LLC) to hold assets. These entities may provide protection from creditors and tax benefits.

Community Property may only be used by married couples in community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin). Each person owns an undivided interest in the entire property. When a spouse dies, the survivor automatically receives the entire interest, so there’s no need for probate. Community property can’t be controlled by a person’s will or trust.

Remember, the way you title your assets has an impact on your overall estate plan. Ask an experienced estate planning attorney to review your estate plan and how assets are titled. If you would like to learn more about titling your assets, please visit our previous posts. 

Reference: FedWeek (July 27, 2022) “How Assets Are Titled Can Make a Big Difference”

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Managing Finances in a Blended Family

Managing Finances in a Blended Family

Family finances can be a big issue in any circumstances. Managing finances in a blended family is even more significant, where two sets of often well-established financial histories and philosophies try to merge into one.

Kiplinger’s recent article entitled “Yours, Mine and Ours: A Checklist for Blended Family Finances” says that a blended family is one where people have remarried, either after a divorce or the death of a spouse. Sometimes it’s older couples already in retirement. In other cases, it’s a younger couple still trying to raise children.

However, regardless of the specifics of any individual situation, when families blend, so do their finances. That is when things can get problematic, if careful planning and communication don’t occur.

Here are a few things to consider:

Money habits. People are raised with different ideas about financial issues. They’re influenced by their parents or by the circumstances of their formative years. Some people are exceptionally frugal and save every penny and seldom, if ever, splurge on something just for fun. Others spend with reckless abandon, unconcerned about the unexpected expenses that life can throw at them at any moment.

Many people are somewhere in between these extremes. If you are entering a serious relationship, you should speak to your new partner about how each of you approaches spending money.

Financial accounts and bills. Once you learn each other’s financial philosophy, you will have decisions to make. These include whether to blend your financial accounts or keep them separate. If the two of you are closely aligned with your finances and how you approach spending, you may want to simply combine everything. If you’re older, have adult children from prior relationships and are more financially established, you may decide to keep things separate.

For many, a hybrid approach may be best — keep some things separate, but have common savings, investments and household accounts to reach your blended goals.

Family. When there are children from a prior marriage — especially young children — additional financial situations will need to be addressed. Issues of child support and how it fits into the overall budget is one concern, as is the status of college funding for the children.

Talk to an experienced estate planning attorney to make sure you managing the finances of your blended family the way you wish. If you would like to learn more about blended families and estate planning, please visit our previous posts. 

Reference: Kiplinger (June 27, 2022) “Yours, Mine and Ours: A Checklist for Blended Family Finances”

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Addressing Financial Issues in a Remarriage

Addressing Financial Issues in a Remarriage

When it comes to addressing financial issues in a remarriage, couples should look at the past.  This should include the way in which each person handled finances, and their pre-marital liabilities and assets, along with the present (e.g., new benefit options) and the future. This means how they’ll handle finances as a unit or protect themselves and loved ones in case of death or divorce.

CNBC’s recent article entitled “Remarrying? Here are financial considerations to keep in mind before saying ‘I do’” says that it’s important to release any financial skeletons from the closet. Here are some smart financial moves for new parents:

It’s critical that blended families have similar talks with their children. The children were most likely brought up in different financial circumstances, so it’s important to talk as a family about new financial expectations.

After the prospective spouses identify their collective financial situation, there are a few topics to consider. For instance, if you were previously married for more than 10 years and collecting Social Security benefits on your ex-spouse’s account, you may forfeit those payments if you remarry.  Your new combined income may also result in a higher tax bill. This is sometimes called a “marriage penalty.”

Moreover, financial communication is a crucial best practice to achieve financial success in a relationship. After you remarry, look at the impact on benefits.

Marriage is a recognized life event, so you may be allowed to change your insurance options outside the regular autumn time window.

You should also be aware that if you were previously divorced and getting substantially discounted insurance via the healthcare.gov exchange, when you remarry, your insurance costs may go up if your joint income goes up.

It’s also smart to consider protecting pre-marital assets that were in your name only. You should consult an experienced estate planning attorney prior to addressing financial issues in a remarriage. They may advise against commingling some or all assets, and suggest a trust, segregating pre-marital assets from marital assets, to protect you in the event of divorce.

Estate planning is vitally important, if you have a new family with children. These are the documents that will take care of the people you love. If you would like to learn more about remarriage issues in estate planning, please visit our previous posts. 

Reference: CNBC (March 7, 2022) “Remarrying? Here are financial considerations to keep in mind before saying ‘I do’”

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A second marriage can complicated estate planning

A Second Marriage can complicate Estate Planning

In first marriages, working together to raise children can solidify a marriage. However, in a second marriage, the adult children are in a different position altogether. If important estate planning issues are not addressed, the relationship between the siblings and the new spouses can have serious consequences, according to a recent article titled “Into the Breach; Getting Married Again?” from the Pittsburgh Post-Gazette. A second marriage can complicated estate planning.

Chief among the issues center on inheritances and financial matters, especially if one of the parties has the bulk of the income and the assets. How will the household expenses be shared? Should they be divided equally, even if one spouse has a significantly higher income than the other?

Other concerns involve real estate. If both parties own their own homes, in which house will they live? Will the other home be used for rental income or sold? Will both names be on the title for the primary residence?

Planning for incapacity also becomes more complex. If a 90-year-old man marries a 79-year-old woman, will his children or his spouse be named as agents (i.e., attorneys in fact) under his Power of Attorney if he is incapacitated? Who will make healthcare decisions for the 79-year-old spouse—her children or her 90-year-old husband?

There are so many different situations and family dynamics to consider. Will a stepdaughter end up making the decision to withdraw artificial feeding for an elderly stepmother, if the stepmother’s own children cannot be reached in a timely manner? If stepsiblings do not get along and critical decisions need to be made, can they set aside their differences to act in their collective parent’s best interests?

The matter of inheritances for second and subsequent marriages often becomes the pivot point for family discord. If the family has not had an estate plan created with an experienced estate planning attorney who understands the complexities of multiple marriages, then the battles between stepchildren can become nasty and expensive.

Do not discount the impact of the spouses of adult children. If you have a stepchild whose partner feels they have been wronged by the parent, they could bring a world of trouble to an otherwise amicable group.

The attorney may recommend the use of trusts to ensure the assets of the first spouse to die eventually make their way to their own children, while ensuring the surviving spouse has income during their lifetime. There are several trusts designed to accomplish this exact scenario, including one known as SLAT—Spousal Lifetime Access Trust.

Discussions about health care proxies and power of attorney should take place well before they are needed. Ideally, all members of the family can gather peacefully for discussions while their parents are living, to avoid surprises. If the relationships are rocky, a group discussion may not be possible and parents and adult children may need to meet for one-on-one discussions. However, the conversations still need to take place.

A second marriage can complicated estate planning. Second marriages at any age and stage need to have a prenuptial and an estate plan in place before the couple walks down the aisle to say, “I do…again.” If you would like to learn more about blended families and estate planning, please visit our previous posts. 

Reference: Pittsburgh Post-Gazette (March 1, 2022) “Into the Breach; Getting Married Again?”

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The Estate of The Union Episode 13: Collision Course – Family Law & Estate Planning

The Estate of The Union Episode 13: Collision Course – Family Law & Estate Planning is out now!

There is a dangerous intersection at the corner of Estate Planning and Divorce. In this podcast of the Estate of the Union, Brad Wiewel interviews Jimmy Vaught, a Board certified Family Lawyer with over 40 years of experience, about how to avoid a potential devastating disaster at that corner. Blended families are very common now. With them comes the often complicated situation between loved ones when someone dies. Brad and Jimmy discuss the common pitfalls and share some tips on how to avoid a collision.

In each episode of The Estate of The Union podcast, host and lawyer Brad Wiewel will give valuable insights into the confusing world of estate planning, making an often daunting subject easier to understand.

It is Estate Planning Made Simple!

To learn more about Jimmy Vaught and the Vaught Law Firm, PC, please visit his website:

 

https://austindivorcelawyer.com/

 

The Estate of The Union episode 13: Collision Course – Family Law & Estate Planning can be found on Spotify, Apple podcasts, or anywhere you get your podcasts. Please click on the link below to listen to the new installment of The Estate of The Union podcast. You can also view this podcast on our YouTube page. The Estate of The Union Episode 13 out now. We hope you enjoy it.

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Texas Trust Law/Texas Trust Law focuses its practice exclusively in the area of wills, probate, estate planning, asset protection, and special needs planning. Brad Wiewel is Board Certified in Estate Planning and Probate Law by the Texas Board of Legal Specialization. We provide estate planning services, asset protection planning, business planning, and retirement exit strategies.

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you should consider a prenup over 60

You should Consider a Prenup over 60

If you are planning to get married, you should consider a prenup over 60 years of age. A “prenup” can spell out which expenses will belong to each individual and which will be for the couple. In addition, a prenup can state where marital assets will go in case of death or divorce, says FedWeek’s recent article entitled “A Prenup May Be Prudent for Later-Life Marriages.”

In some states, a prenuptial agreement is called an “antenuptial agreement” or a “premarital agreement.”

Sometimes the word “contract” is used rather than “agreement,” as in “prenuptial contract.”

An agreement made during marriage, rather than before, is known as a “postnuptial,” “post-marital,” or “marital” agreement.

For a prenup to be valid, each party should seek the advice of an attorney. These attorneys should be independent of each other, so one attorney shouldn’t represent both parties. The agreement should fully disclose each spouse-to-be assets and liabilities.

Here are some reasons that some people want a prenup:

  • Pass separate property to children from your prior marriages. A marrying couple with children from prior marriages may sign a prenup to state what will occur to their assets when they die, so that they can pass on separate property to their children and still provide for each other, if necessary. Without a prenup, a surviving spouse may have the right to claim a large piece of the other spouse’s property, resulting in much less for the stepchildren.
  • Clarify financial rights. Couples with or without children may just want to clarify their financial rights and responsibilities during marriage.
  • Avoid disagreements in a divorce. A couple may want to avoid potential arguments if they divorce, by stating in advance the way in which their property will be divided, and whether or not either spouse will receive alimony (some states won’t allow a spouse to give up the right to alimony).
  • Protection from debts. These agreements can also be used to protect spouses from each other’s debts, and they may also speak to a number of other issues.

Some prenups have been ruled invalid by the courts, when one spouse appears to have pressured the other to sign the contract right before the wedding. To implement a prenup, don’t wait until the last minute. Before making marriage plans, consider creating a prenup if you are over 60. If you would like to read more about second marriages, or marriage later in life, please visit our previous posts. 

Reference: FedWeek (Aug. 25, 2021) “A Prenup May Be Prudent for Later-Life Marriages”

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Information in our blogs is very general in nature and should not be acted upon without first consulting with an attorney. Please feel free to contact Texas Trust Law to schedule a complimentary consultation.
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