Michigan Estate Planning Blog

What Happens When Blended Families Ignore Estate Planning?

 

The idea of a “Brady Bunch” family, where two adults with children from prior marriages blend their families, is filled with good intentions. With time and patience, a real family can be created if all parties are willing participants. That is until one of the parents dies and the will is revealed, according to the article “The Brady Bunch Breaks Down: Estate Fights Tear Stepfamilies Apart” from The Wall Street Journal.

The typical estate plan for couples and their families is for the surviving spouse to inherit all the assets when the first parent dies. In a blended family, non-biological children are often disinherited. The spouse has no legal obligation to give anything to the biological children, and, making matters worse, the stepsiblings will inherit the deceased stepparent’s assets.

All of the work to blend the families can be undone. The stories are heartbreaking: children changing locks and kicking out their stepmother before the funeral, adult children learning they’ve inherited nothing, while the stepmother receives a lifetime of assets.

Good planning with an experienced estate planning attorney can prevent these and other ugly scenarios.

Establishing a joint trust to give children equal shares after the second parent dies sounds like a good idea. However, if the stepparent moves the assets into a new trust and names their own biological children as the beneficiaries, the first parent’s children are disinherited.

Creating separate trusts can work. However, they need to be iron-clad. Other options are distributing assets while the parent is living or leaving a specific amount (either a dollar amount or a percentage) in the will directly to the named children. Some families keep biological children in the estate plan and fund a separate trust for the spouse and stepchildren.

A prenuptial agreement is a good tool for blended families. However, it should be in addition to, not instead of, an estate plan.

In some states, the default rule is for the surviving spouse to keep half the community property and have no right in the deceased’s separate property. Most states also allow a surviving spouse to claim an elective share, typically a third or half of the estate.

Another problem that blended families must address is planning for illness and incapacity. The spouse usually makes medical decisions and funeral arrangements. However, stepchildren may have different ideas than their stepparents. Both parents should have their wishes expressed in documents, including a Power of Attorney, Healthcare Power of Attorney, Living Will and whatever documents are required by state and federal laws.

Consider naming an executor or trustee who is neither a biological child nor a relative. Having someone who is impartial and trustworthy could relieve pressure on the children.

An estate planning attorney can clarify the possible issues arising for stepfamilies regarding asset distribution, asset protection, medical directives and planning for incapacity.

Reference: The Wall Street Journal (June 1, 2024) “The Brady Bunch Breaks Down: Estate Fights Tear Stepfamilies Apart”

Estate Planning for Unmarried Senior Couples

An increasing number of couples at various stages of life are choosing to live together without marrying, making estate planning a bit more challenging. This is true whether the couple is relatively young and has children or if they are seniors, according to a recent article from Kiplinger, “Estate Planning and the Legal Quirks of Retiree Cohabitation.”

From one perspective, living together without being legally married provides an advantage: you have your own estate plan. You may distribute assets after death with no obligation to leave anything to a partner or their biological children. In many jurisdictions, the law requires spouses to leave a significant portion to their surviving spouse. This doesn’t apply if you’re cohabitating.

However, there are downsides. For example, a surviving unmarried partner doesn’t benefit from inheriting assets without estate taxes. A non-spouse transferring assets may find themselves generating sizable estate or income taxes. To avoid this, your estate planning attorney will discuss tax liability strategies.

Owning real property together can get complicated. Consider an unmarried couple buying a property solely in one person’s name, excluding the partner to sidestep any possible gift taxes. If the sole owner dies, the partner has no claim to the property. The solution could be planning for property rights in the estate plan, possibly leaving the property outright to the partner or in trust for the partner’s use throughout their lifetime. It still has to be planned for in advance of incapacity or, of course, death.

Regarding healthcare communication and directives, special care must be taken to ensure that the couple can be involved in each other’s care and decision-making. By law, decision-making might default to the married spouse or kin. Without a designated healthcare proxy, a cohabitating partner has no legal authority to obtain medical information, make medical decisions, or, in some cases, won’t even have the ability to have access to a hospitalized partner. A healthcare power of attorney is essential for unmarried couples.

For senior couples living together, blending families can be challenging. However, blending finances can be even more complex. Living together later in life can create many concerns if there are former spouses or children from a prior relationship. If a senior decides to marry, they are advised to have a prenuptial agreement so children from previous unions are not disinherited. If a potential spouse has big issues signing such a document, it should raise a red flag to their motivation to marry.

While living together without the legal protection of marriage is an individual decision and may be seen as a means of avoiding legalities, it needs to be examined from the perspective of estate planning to protect both parties and their families. Couples must prepare for the future, for better or worse, in sickness and health.

Reference: Kiplinger (Dec. 6, 2023) “Estate Planning and the Legal Quirks of Retiree Cohabitation”

 

Blunders in Estate Planning May Lead to Breach of Family Harmony

 

The Financial Post’s recent article entitled “Avoid these five mistakes when estate planning to preserve family peace” provides us with some of the biggest mistakes:
1. Treating family members differently. People do this frequently. They may have valid reasons for doing so. However, it’s still not a great idea. Instead, comfortably tell your children in advance why you’re doing this. This will avoid anger and jealousy between the children when they discover this. Try to leave assets equally, even if you don’t think it is fair.
2. Pass the family vacation home to multiple children. It's best to either sell the home in your later years or, if you keep it, make sure it is openly discussed. You might set up life insurance to specifically pay taxes and perhaps one or two children, so the remaining children can afford to keep the cottage. Even so, a sale is the cleanest approach.
3. Don’t tell the children anything about your money. Not a good idea. This approach often eliminates any ability to understand what might be most meaningful to your children or beneficiaries. Maybe less so in terms of cash, but in terms of family heirlooms or property. Perhaps a favorite piece of furniture was really important to two children, but there was never any discussion about it. As a result, it’s now completely left to them to fight over. This may sound like a small issue. However, many families have split up forever over just this type of scenario.
4. Purposely or inadvertently leaving most or all assets to a new spouse. It can occur by accident due to poor planning around ownership titles, lack of pre-nuptial agreements or the unintended naming of beneficiaries on investment accounts or life insurance. However, sometimes, it’s meant to hurt the children. The hurt can certainly go both ways and is frequently a major issue when a spouse isn’t treated fairly. Ask an experienced estate planning attorney to walk through this with you.
5. Significant charitable giving. If your gifts to charity aren’t discussed with your so-called traditional beneficiaries, there can be conflicts with the charity that can be drawn out.
Communicate what you’re doing and why to your family.
Reference: Financial Post (Nov. 9, 2022) “Avoid these five mistakes when estate planning to preserve family peace”

What Exactly Is a Prenup?

There are some important financial decisions that need to be made before you get hitched. One of them is whether you should get a prenuptial agreement (“prenup”). This isn’t the most romantic issue to discuss, especially because these agreements usually focus on what will happen in the event of the marriage ending. However, in many cases, having tough conversations about the practical side of marriage can actually bring you and your spouse closer together.

JP Morgan’s recent article entitled “What to know about prenups before getting married” explains that being prepared with a prenup that makes both people in a marriage feel comfortable can be a great foundation for building a financially healthy and emotionally healthy marriage.

A prenup is a contract that two people enter before getting married. The terms outlined in a prenup supersede default marital laws, which would otherwise determine what happens if a couple gets divorced or one person dies. Prenups can cover:

How property, retirement benefits and savings will be divided if a marriage ends;

If and how one person in the couple is allowed to seek alimony (financial support from a spouse); and

If one person in a couple goes bankrupt.

Prenups can be useful for people in many different income brackets. If you or your future spouse has a significant amount of debt or assets, it’s probably wise to have a prenup. They can also be useful if you (or your spouse) have a stake in a business, have children from another marriage, or have financial agreements with an ex-spouse.

First, have an open and honest conversation with your spouse-to-be. Next, talk to an attorney, and make sure he or she understands you and your fiancé’s unique goals for your prenup. You and your partner will then compile your financial information, your attorney will negotiate and draft your prenup, you’ll review it and sign it.

Remember that a prenup can be a useful resource for couples in many different circumstances.

It might feel overwhelming to discuss a prenup with your fiancé, but doing this in a non-emotional, organized way can save a lot of strife in the future and could help bring you closer together ahead of your big day.

Reference: JP Morgan (April 4, 2022) “What to know about prenups before getting married”

 

What Should I Know about Estate Planning before ‘I Do’?

Romance is in the air. Spring is the time for marriages, and with America coming out of the pandemic, wedding calendars will be filled.

AZ Big Media’s recent article entitled “5 estate planning tips for newlyweds” gives those ready to walk down the aisle a few things to consider.

1. Prenuptial Agreement. Commonly referred to as a prenup, this is a written contract that you and your spouse enter into before getting legally married. It provides details on what happens to finances and assets during your marriage and, of course, in the event of divorce. A prenup is particularly important if one of the spouses already has significant assets and earnings and wishes to protect them in the event of divorce or death.

2. Review you restate plan. Even if you come into a marriage with an existing plan, it’s out of date as soon as you’re wed.

3. Update your beneficiary designations. Much of an individual’s estate plan takes place by beneficiary designations. Decide if you want your future spouse to be a beneficiary of life insurance, IRAs, or other pay on death accounts.

4. Consider real estate. A married couple frequently opts to live in the residence of one of the spouses. This should be covered in the prenup. However, in a greater picture, decide in the event of the death of the owner, if you’d want this real estate to pass to the survivor, or would you want the survivor simply to have the right to live in the property for a specified period of time.

5. Life insurance. You want to be sure that one spouse is taken care of in the event of your death. A married couple often relies on the incomes of both spouses, but death will wreck that plan. Think about life insurance as a substitute for a spouse’s earning capacity.

If you are soon-to-be-married or recently married and want to discuss it with an expert, make an appointment with a skilled estate planning attorney.

Reference: AZ Big Media (March 23, 2022) “5 estate planning tips for newlyweds”

Should I Sign a Prenup before I Get Married again at 60?

 

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.
To implement a prenup, don’t wait until the last minute.
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.
Reference: FedWeek (Aug. 25, 2021) “A Prenup May Be Prudent for Later-Life Marriages”

Is A Prenup Right For You? Saginaw, Michigan

Prenuptial agreements – prenups – are a study in contrasts. On the one hand, you are pledging to love and care for your future spouse for life, for better or for worse, while on the other hand you are jotting out a kind of contingency plan. Face it: a prenup is not a romance enhancer. Still, especially with blending families, a prenup can be a prudent tool to maintain peace and domestic tranquility between the respective sides of the to-be-formed family. Love may be blind, but it is best to enter the marriage with both eyes open. Not surprisingly, the use of prenups is on the rise. For an interesting perspective on the prenup, consider a recently published article from Reuters called “Three things to consider before you ask for a pre-nup.” What exactly should you consider? Well for starters, every prenup represents the coming together of two very different and complex financial lives, two lives of separate assets and separate liabilities. Things can get complicated quickly. A prenup, however, offers both a way of seeing difficulties and of resolving them far in advance. Another interesting take-away from the article is that future inheritances ought to be addressed in the prenup, not just your current income and assets. How and when an inheritance may be received can be extremely important, especially when the inheritance may include important family assets, even ownership in a family business. Consequently, those planning for such “family assets” in their estates today already may be asking of their children to include these assets in the prenuptial agreement negotiations simply to protect the family. There is much to consider when it comes to planning a prenup, in addition to a wedding itself. If you are needing a little more encouragement, then a Forbes article titled “Why I Decided To Get A Prenup -- And So Should You” may help address some of your concerns.

Reference: Reuters (November 27, 2013) “Three things to consider before you ask for a pre-nup”

For more information, see www.jerryreiflawyer.com

 

Is A Prenup Right For You? Mid-Michigan

Prenuptial agreements – prenups – are a study in contrasts. On the one hand, you are pledging to love and care for your future spouse for life, for better or for worse, while on the other hand you are jotting out a kind of contingency plan. Face it: a prenup is not a romance enhancer. Still, especially with blending families, a prenup can be a prudent tool to maintain peace and domestic tranquility between the respective sides of the to-be-formed family. Love may be blind, but it is best to enter the marriage with both eyes open. Not surprisingly, the use of prenups is on the rise. For an interesting perspective on the prenup, consider a recently published article from Reuters called “Three things to consider before you ask for a pre-nup.” What exactly should you consider? Well for starters, every prenup represents the coming together of two very different and complex financial lives, two lives of separate assets and separate liabilities. Things can get complicated quickly. A prenup, however, offers both a way of seeing difficulties and of resolving them far in advance. Another interesting take-away from the article is that future inheritances ought to be addressed in the prenup, not just your current income and assets. How and when an inheritance may be received can be extremely important, especially when the inheritance may include important family assets, even ownership in a family business. Consequently, those planning for such “family assets” in their estates today already may be asking of their children to include these assets in the prenuptial agreement negotiations simply to protect the family. There is much to consider when it comes to planning a prenup, in addition to a wedding itself. If you are needing a little more encouragement, then a Forbes article titled “Why I Decided To Get A Prenup -- And So Should You” may help address some of your concerns.

Reference: Reuters (November 27, 2013) “Three things to consider before you ask for a pre-nup”

For more information, see www.jerryreiflawyer.com

 

Post-DOMA: Same-Sex Prenuptial Agreements

If you are not yet married to your same-sex partner, but intend to do so, then one of the most important things to plan for is that gay marriage is still wholly new. Then again, the next most important thing to plan for is that the problems of late-in-life marriage will affect you irrespective of the gender of the partners. A recent Forbes article titled “Before Marriage, Same Sex Couples Need Prenups,” provided some pithy advice. The term “late-in-life marriage,” while perhaps not soft on the ego, is a term designed to acknowledge that you are not blushing eighteen-year-olds, with no assets, careers, or names in the world. In fact, most same-sex partners, couples, and married persons will have fully established and separate financial and legal lives, sometimes by design and often by strict necessity. Regardless, marriage in this new, post-DOMA world will mean a collapse of those borders. Whether heterosexual or homosexual, couples that are comprised of well-established individuals have so much to consider, including retirement accounts and even accrued liabilities. Consequently, marriage may require planning what should be joined and what should remain separate. The original article illustrates how prenuptial agreements are being deployed today as more and more persons marry “late-in-life” and that same-sex marriages are (now) no exception in this regard. Either way, “marriage” is and always has been a very legally loaded term. We are still learning what same-sex marriage will mean, and to some extent we are still learning what marriage in this day and age will mean. Regardless, a solid prenuptial agreement is an important consideration.

Reference: Forbes (June 27, 2013) “Before Marriage, Same Sex Couples Need Prenups”

For more information, see www.jerryreiflawyer.com

 

Planning Prenuptial Priorities Properly Saginaw, Michigan

The air is still heavy from another tax season. However, if you lift your ears to the gentle spring breezes, you may hear distant bells announcing this year’s wedding season. With many of these weddings will come financial complications that require attention, well before the vows are exchanged. Marriage is not just “tying the knot,” so to speak. No, marriage by its legal nature includes tying together all of your financial resources and interests. Unfortunately, these days marriage also has a dark side too: divorce. For those couples with important financial resources and interests in the marital mix, they may elect to use a prenuptial agreement as sort of an “insurance” policy in the event the marriage doesn’t work out as planned. Prenuptial agreements are nowhere as exotic as they are portrayed in the popular imagination. They can be, nevertheless, useful and important documents when produced through a spirit of full disclosure, careful deliberation, and independent legal representation. Otherwise, as pointed out in numerous articles these days, no prenuptial agreement is ironclad unless it is done correctly and, essentially, treated like the contractual understanding that it is. Recently, Forbes provides some guidance to evaluate the effectiveness of your prenuptial agreement in an article titled “Five Reasons Your Prenup Might Be Invalid.” In addition, The Wall Street Journal offers some specific guidance to get your prenuptial agreement ship-shape in an article titled “Shoring Up Your Prenup.” Used correctly, a prenuptial agreement, or even a post-nuptial agreement as the case may be, can help a couple frame their financial resources and interests in the context of their life together come what may. That can provide great peace of mind, especially when blending families and the children from those families.

Reference: Forbes (April
2, 2013) “Five Reasons Your Prenup Might Be Invalid”

The Wall Street Journal (March 29, 2013) “Shoring Up Your Prenup”

For more information, see www.jerryreiflawyer.com

 

Planning Prenuptial Priorities Properly Saginaw, Michigan

The air is still heavy from another tax season. However, if you lift your ears to the gentle spring breezes, you may hear distant bells announcing this year’s wedding season. With many of these weddings will come financial complications that require attention, well before the vows are exchanged. Marriage is not just “tying the knot,” so to speak. No, marriage by its legal nature includes tying together all of your financial resources and interests. Unfortunately, these days marriage also has a dark side too: divorce. For those couples with important financial resources and interests in the marital mix, they may elect to use a prenuptial agreement as sort of an “insurance” policy in the event the marriage doesn’t work out as planned. Prenuptial agreements are nowhere as exotic as they are portrayed in the popular imagination. They can be, nevertheless, useful and important documents when produced through a spirit of full disclosure, careful deliberation, and independent legal representation. Otherwise, as pointed out in numerous articles these days, no prenuptial agreement is ironclad unless it is done correctly and, essentially, treated like the contractual understanding that it is. Recently, Forbes provides some guidance to evaluate the effectiveness of your prenuptial agreement in an article titled “Five Reasons Your Prenup Might Be Invalid.” In addition, The Wall Street Journal offers some specific guidance to get your prenuptial agreement ship-shape in an article titled “Shoring Up Your Prenup.” Used correctly, a prenuptial agreement, or even a post-nuptial agreement as the case may be, can help a couple frame their financial resources and interests in the context of their life together come what may. That can provide great peace of mind, especially when blending families and the children from those families.

Reference: Forbes (April
2, 2013) “Five Reasons Your Prenup Might Be Invalid”

The Wall Street Journal (March 29, 2013) “Shoring Up Your Prenup”

For more information, see www.jerryreiflawyer.com

 

Asset Protection with Postnuptial Agreements

Move over ‘prenup’, there’s a new marriage document in town that can protect your assets even after you’ve said “I do.” That’s right, more and more married couples are opting to protect their assets with a postnuptial agreement. Although the idea of marriage is to be together forever, many couples recognize that things can go wrong in a relationship. The stuff that can throw a monkey wrench into a marriage are things like children from a prior marriage, separate assets and estate plans, and, yes, even inheritances. So, even if you did not work out agreements regarding such stuff before exchanging vows, there’s always a cure after the fact. Enter the postnuptial agreement. According to recent studies and an article in Private Wealth titled “Postnuptial Agreements On Rise, Lawyers Say,” you may never have considered a ‘postnup’, but an increasing number of people have and are. Across various incomes, married couples have found them to be valuable tools. There are many reasons to support this trend, even between spouses who otherwise would not ordinarily commit such agreements to paper. Whether or not a postnuptial agreement is right for you, make note that these agreements can provide a practical pre-condition for an heir and spouse to adopt as part of your estate planning.

Reference: Private Wealth (September 12, 2012) “Postnuptial Agreements On Rise, Lawyers Say”

First Comes Love, Then Comes Marriage (or is it the Prenup?)

Summer is the official “I do” season as couples across the country exchange marriage vows. However, given the dismal marriage success rate, many of those exchanging nuptials (not to mention their respective parents) are also pondering their exit strategies in case things don’t work out. Single life can be complex on its own with its own hopes, debts, investments, family members, obligations, and health concerns. Marriage, on the other hand, can be a uniquely tricky institution. When you multiply single life by two in a manner legally recognized by IRS agents, insurers, and in-laws, then everything becomes compounded. Estate planning can be a complex adventure, too, especially if you are blending families with children from a previous marriage. In addition, issues regarding family inheritance, family businesses, farm and ranches, can require careful navigation. Now that you have a special someone in your life worth keeping, it may be worth mitigating concerns early and intelligently through prenuptial agreement planning. If you recoil, or simply want to know more, then a recent article in WealthManagement.com will be worth your time. The article is titled “Debunking the Pre-nup Myths,” and, as the title promises, it may help you and your intended get a more accurate handle on the subject. On the other hand, even if you are familiar with the world of prenups, The Wall Street Journal offers some practical premarital counseling of its own in an article titled “Easing the Sting of Divorce.” Finally, even if there’s already a slice of wedding cake resting in the freezer and all is happy and well, there’s the less frequently discussed option of the postnuptial agreement. This matter was taken up in another article by The Wall Street Journal titled “Spouses Turn to Postnups.” Ultimately, the relevance of any of these approaches varies depending upon your unique needs and objectives, along with those of your partner. This is not a do-it-yourself project. Be sure to engage appropriate independent legal counsel to represent your respective interests to avoid potential conflicts of interest and unnecessary litigation down the road.

Reference: WealthManagement.com (June 12, 2012) “Debunking Pre-nup Myths”

            The Wall Street Journal (June 15, 2012) “Easing the Sting of Divorce”

The Wall Street Journal (June 16, 2012) “Spouses Turn to Postnups”

Are Prenuptial Agreements in Vogue?

Regardless of who you are, what you do, who your loved ones are, and what you own, planning for your family and for your assets is a necessary and ongoing activity. Estate planning is a process, not an event. This is especially true when you and your family situation happens to be a little more complicated than most. In that case, proper planning is absolutely vital. What may be a trend for a new generation of complexities and one that is making headlines anew, believe it or not, is the prenuptial agreement. The recent murmurs about prenuptial agreements come like most financial news these days, by way of Facebook’s newlywed Mark Zuckerberg. A recent article in CBS MoneyWatch titled, “Why Mark Zuckerberg needs a prenup,” makes the case for his need for a prenuptial agreement. Zuckerberg and his millions (or whatever his net worth) aside, the prenuptial agreement has its place in an era of mixed families, divorces, remarriages, and all the other increasingly common family structures today. In addition, as pointed out in the original article, people are getting married later, or otherwise remarried, when they already have complicated assets. Divorces aside, complicated assets often necessitate complicated planning.

Reference: CBS MoneyWatch (May 19, 2012) “Why Mark Zuckerberg needs a prenup”

 

Potential Portability Problems

Much ado has been made about the new power in estate planning known as “portability,” and for good reason. Nevertheless, it’s also prudent never to put all your eggs in one basket. So it is with the matter of estate tax exemption portabilility. I’ve written previous blog posts regarding some of those issues, like when the Journal of Financial Planning upheld the credit-shelter trust over “portability”, but a recent Bloomberg article gives renewed emphasis and food for thought. As you may know, “portability” is the new ability for a deceased spouse to transfer their unused gift and estate tax exemption amount to their surviving spouse. Provided all the required paperwork is timely filed with the IRS, that effectively allows a married couple to exempt an astounding $10 million from federal taxes for their loved ones without the use of trusts or legal devices. Bloomberg suggests that it is better to think of portability as a “safety valve” for married couples, especially those whose assets would be entirely covered by the doubled exemption, but not something to be relied upon. The biggest limitation, for one, is that portability exists at the whim of lawmakers. After the budget showdown last December, existence of portability is only guaranteed until the end of 2012 (if that, Congress being the politically fickle animal that it is). But there is another important caveat Bloomberg touches upon that is worth mentioning. Portability is a power that exists between spouses, but in a world of shifting marriages, divorces, and remarriages that also creates strange limitations. Portability only applies to the last deceased spouse. Accordingly, if a widow remarries, then they could potentially lose that massive exemption (even after their own estate has doubled, creating an estate tax liability). Indeed, if portability isn’t lost and if the widow’s new spouse predeceases after using their own exemption by gifting, then the widow’s estate is in the same tricky situation. Portability is a wonderful tool to consider, but clearly, too, it is a difficult one with which to make long-term estate tax plans. More information and ideas about trusts can be found in those articles, and of course the best resource is your own legal counsel.

Reference: Bloomberg (August 16, 2011) “Wealthy Take Estate-Tax Exemptions Beyond Grave Until 2013”

ESTATE PLANNING / PRENUPTIAL AGREEMENTS

Marriage is a tricky institution, enough so to feed a thriving business for therapists and prime-time sitcoms alike. Re-marriage can be even trickier, especially when it comes to your estate planning. If you are considering re-marriage, you may be well advised to also consider a prenuptial agreement. Though it may not seem the most romantic gesture, a prenuptial agreement is simply an honest disclosure of both parties’ assets and agreement as to their distribution should the union dissolve, or at the death of either spouse. Enter re-marriage without one at your own risk – or that of your estate. As recently highlighted on the ElderLawAnswers website, without a prenuptial agreement, your new spouse could invalidate your existing estate plan. For example, suppose you and your new spouse each have children from a previous marriage. You intend for your house to pass to your children, but without proper planning and a prenuptial agreement in place, your new spouse could inherit your house and then pass it on to her children when she dies. Disinheriting your own children probably was not your plan. You’ll need to follow special protocol to ensure your prenuptial agreement is valid, to include that it must be in writing, signed without pressure on either party, both spouses must read and understand the agreement, disclosures must be complete and completely honest, and the agreement cannot be grossly unfair or contain illegal provisions (such as a modification to child support obligations). If you are already re-married and did not sign a prenuptial agreement, it may not be too late for you and your spouse to resolve these issues with a post-nuptial agreement. Reference: ElderLawAnswers.com (June 6, 2011): Prenuptial Agreements Can Be an Estate Planning Tool.