EHDH Estate Planning

Does Marriage have an Impact on a Will?

It is very difficult to challenge a marriage once it has occurred, since the capacity needed to marry is relatively low. Even a person who is under conservatorship because they are severely incapacitated may marry, unless there is a court order stating otherwise, says the article “Estate Planning: On Being Married, estate planning and administration” from Lake Country News. This unfortunate fact allows scammers to woo and wed their victims.

What about individuals who think they are married when they are not? A “putative” spouse is someone who genuinely believed they were married, although the marriage is invalid, void, or voidable because of a legal defect. An example of a legal defect is bigamy, if the person is already married when they marry another person.

Once a couple is married, they owe each other a duty to treat each other fairly. In certain states, they are prohibited from taking unfair advantage of each other. Depending on the state of residence, property is also owned in different ways. In a community property state, such as California, marital earnings and anything acquired while married is presumed to be community property.

In a community property state, debts incurred before or during the marriage are also shared. In a number of states, marriage is sufficient reason for a creditor to come after the assets of a spouse, if they married someone with pre-marital debts.

There are exceptions. If a married person puts their earnings during marriage into a separate bank account their spouse is not able to access, then those deposited earnings are not available for debtor spouse’s debts incurred before the marriage took place.

If a married person dies without a will, also known as “intestate,” the surviving spouse is the next of kin.  In most cases, they will inherit the assets of the decedent. If the decedent had children from a prior marriage, they may end up with nothing.

These are all reasons why couples should have frank discussions about finances, including assets and debts, before marrying. Coming into the marriage with debt may not be a problem for some people, but they should be advised beforehand.

A pre-nuptial agreement can state the terms of the couple’s financial health as individuals and declare their intentions. An experienced estate planning attorney can create a pre-nuptial to align with the couple’s estate plan, so the estate plan and the pre-nuptial work together.

Marriage brings rights and responsibilities which impact life and death for a couple. Starting a marriage based on full disclosure and proper planning clears the way for a focus on togetherness, and not solely the business side of marriage.

Reference: Lake Country News (Feb. 12, 2022) “Estate Planning: On Being Married, estate planning and administration”

What Is Family Business Succession Planning?

Many family-owned businesses have had to scramble to maintain ownership, when owners or heirs were struck by COVID-19. Lacking a succession plan may have led to disastrous results, or at best, less than optimal corporate structures and large tax bills. This difficult lesson is a wake-up call, says the article “Succession Planning for the Family-Owned Business—Keepin’ it ‘All in the Family’” from Bloomberg Tax.

Another factor putting family-owned businesses at risk is divorce. Contemplating the best way to transfer ownership to the next generation requires a candid examination of family dynamics and acknowledgment of outsiders (i.e., in-laws) and the possibility of divorce.

Before documents can be created, a number of issues need to be discussed:

Transfer timing. When will the ownership of the business transfer to the next generation? There are some who use life-events as prompts: births, marriages and/or the death of the owners.

How will the transfer take place? Corporate structures and estate planning tools provide many options limited only by the tax liabilities and wishes of the family. Be wary, since each decision for the structure may have unintended consequences. Short and long-term strategic planning is needed.

To whom will the business be transferred? Who will receive an ownership interest and what will be the rights of ownership? Will there be different levels of ownership, and will those levels depend upon the level of activity in the business? Will percentages be used, or shares, or another form?

In drafting a succession plan, it is wise to assume that the future owners will either marry or divorce—perhaps multiple times. The succession plan should address these issues to prevent an ex-spouse from becoming a shareholder, whose interest in the business needs to be bought out.

The operating agreement/partnership agreement should require all future owners to enter into a prenuptial agreement before marriage specifically excluding their interest in the family business from being distributed, valued, or deemed marital property subject to distribution, if there is a divorce.

An owner may even exact a penalty for a subsequent owner who fails to enter into a prenup prior to a marriage. The same corporate document should specifically bar an owner’s spouse from receiving an ownership interest under any circumstance.

A prenup is intended to remove the future value of the owner’s interest from the marital asset pool. This typically requires the owner to buy-out the future spouse’s legal claim to future value. This could be a costly issue, since the value of the future ownership interest cannot be predicted at the time of the marriage.

Many different strategies can be used to develop a succession plan that ideally works alongside the business owner’s estate plan. These are used to ensure that the business remains in the family and the family interests are protected.

Reference: Bloomberg Tax (April 5,2021) “Succession Planning for the Family-Owned Business—Keepin’ it ‘All in the Family’”

What Is Fair in a Second Marriage and Estate Planning?

The assets you and your second spouse bring into the marriage need to be carefully considered when revising your estate plan, says a recent article “Value of an Estate Plan Review With a Second Marriage” from Mondaq. If there are children from one or both partner’s prior marriages, those too need to be considered. If you plan on having children together, the estate plan needs to include this as well.

The best time to prepare this new estate plan would be before the wedding. This way, you can both go forward with the wedding and celebration with clear minds and hearts.

Start with a complete inventory of all assets and debts. List financial accounts, including investments, savings and checking accounts. Real estate and any personal assets, pensions and tax deferred retirement accounts should be included.

Review your wills, trusts, health care plans and directives, powers of attorney and any other estate planning documents at this time.

There may be assets that need to be retitled, and beneficiaries on all assets that permit designated beneficiaries should be updated at this time. Check to be sure a prior spouse is not the beneficiary of any life insurance or pensions. Any debts or liabilities that one partner brings to the marriage should be reviewed at this time. Comingling accounts and marriage will make both spouses responsible for each other’s debts, which should be discussed candidly.

Based on the inventory, one or the other partner may wish to have a prenuptial agreement to protect their individual financial interests. A prenuptial agreement may also be used to waive respective rights to each other’s property. These agreements are also used to serve as a means of retaining control of a business and defining premarital assets and debt.

When children are involved, decisions need to be made as to how assets are to be divided. Does one spouse want to leave their assets to their own children or to all of the children?

One way of addressing children in a second marriage is to create a separate marital trust to ensure that the new spouse receives the share of the assets you want them to have, while preserving your children’s inheritance. In the case of IRAs, it may be prudent to split them into separate IRAs among your spouse and children to protect the children’s inheritance.

When naming new beneficiaries, be aware that your new spouse may have mandatory rights to certain assets, such as qualified retirement plans. The only person who can inherit a Health Savings Account (HSA) without it becoming taxable, is your spouse. Remember to change this from your former spouse to the new spouse. Naming your children as the beneficiary would cause the account to be taxable on your death.

An estate planning attorney who has worked with second and subsequent marriages can help facilitate a discussion about structuring an estate plan. Working with a professional who knows how these situations are resolved can be a great help in getting the process started and keeping it moving forward.

Reference: Mondaq (March 2, 2021) “Value of an Estate Plan Review With a Second Marriage”

Planning Future for Nontraditional Families

Today’s non-traditional family are not just LGBTQ couples, but families undergoing gray divorces, blended families, stepchildren, multinational families and children born through assisted reproductive technologies, referred to as ART, in a recent article titled “How to Plan for LGBTQ, Blended Families, Cohabitation, Other Nontraditional Families” from Financial Advisor.

The key is having an estate plan prepared that is flexible so that last wills, trusts, and all documents reflect the non-traditional family very clearly and do not leave room for courts to make decisions. Here are a few new elements to consider:

Gendered pronouns and definitions. Ideally, your estate documents should use specific names of individuals, not pronouns. We live in a fluid society and using pronouns could lead to unnecessary complications.

Recognize ART and its implications. If there are children conceived by ART, they need to be explicitly included as children of the family. DNA testing can result in a child inheriting assets from a parent they never knew. It may be wise to exclude biological children, parents or siblings who do not have a relationship with the family.

Trust Protector/Trust Decanting. By including provisions that permit trusts to be decanted, that is, transferred from one trust to another, your estate planning attorney will create flexibility to allow a trust protector (a non-fiduciary appointment of a third party) to make changes. The selection of the trust protector is particularly important, as they could have a large impact on the overall plan.

Marriage, non-marital relationships, divorce, remarriage. An estate plan needs to prepare for future changes with precision and flexibility. Protecting the family, its privacy and dignity can be done by limiting the information in the last will, which becomes a public document. While we can’t know what the future holds, we can plan for change.

Prenuptial agreements. State laws vary on what is acceptable and procedurally necessary for a prenup to be enforceable. Typically, the agreement must be voluntary and include full disclosure of both parties’ financial situation. In some states, post-nuptials can be prepared, if the parties can’t agree on the document before they are legally wed.

Divorce creates special estate planning issues. Beneficiary designations need to be changed for life insurance, IRAs and other non-probate assets. Take affirmative steps to ensure that ex-spouses, or soon-to-be exes are removed as beneficiaries on all accounts, including pensions and insurance plans subject to ERISA.

Cohabitating couples. Marital gifts are tax free, but that is not the case for people living together. Estate planning and tax planning needs to be done, so the surviving partner is taken care of. This may include the creation of a cohabitation agreement, similar to a prenuptial agreement.

Planning for sickness and death. Explicitly stating wishes for end-of-life medical treatments, including feeding tubes, respirators, heart machines, etc., is step one in having an Advance Medical Directive created. Step two is deciding who is empowered to make those decisions. Someone who is unmarried but has a partner or a second spouse needs to be authorized. Note that when an individual is hospitalized, stepparents may attempt to deny access to spouses’ children, or children may block access to a stepparent. There should also be a Do Not Resuscitate (DNR) or Physicians Orders for Life-Sustaining Treatment (POLST) in place with the person’s wishes.

Non-traditional families of all types need to protect the family with estate planning and documentation. Issues about protecting children, making health care decisions for a critically ill partner and control of assets must be addressed in a way that respects the individuals and their families while working within the law.

Reference: Financial Advisor (Feb. 2, 2021) “How to Plan for LGBTQ, Blended Families, Cohabitation, Other Nontraditional Families”

Estate Planning for a Second Marriage and Blended Family

It takes a certain kind of courage to embark on second, third or even fourth marriages, even when there are no children from prior marriages. Regardless of how many times you walk down the aisle, the recent article “Establishing assets, goals when planning for a second marriage” from the Times Herald-Record advises couples to take care of the business side of their lives before saying “I do” again.

Full disclosure of each other’s assets, overall estate planning goals and plans for protecting assets from the cost of long-term care should happen before getting married. The discussion may not be easy, but it’s necessary: are they leaving assets to each other, or to children from a prior marriage? What if one wants to leave a substantial portion of their wealth to a charitable organization?

The first step recommended with remarriage is a prenuptial or prenup, a contract that the couple signs before getting married, to clarify what happens if they should divorce and what happens on death. The prenup typically lists all of each spouses’ assets and often a “Waiver of the Right of Election,” meaning they willingly give up any inheritance rights.

If the couple does not wish to have a prenup, they can use a Postnuptial Agreement (postnup). This document has the same intent and provisions as a prenup but is signed after they are legally wed. Over time, spouses may decide to leave assets to each other through trusts, owning assets together or naming each other as beneficiaries on various assets, including life insurance or investment accounts.

Without a pre-or postnup, assets will go to the surviving spouse upon death, with little or possibly nothing going to the children.

The couple should also talk about long-term care costs, which can decimate a family’s finances. Plan A is to have long-term care insurance. If either of the spouses has not secured this insurance and cannot get a policy, an alternate is to have their estate planning attorney create a Medicaid Asset Protection Trust (MAPT). Once assets have been inside the trust for five years for nursing home costs and two-and-a-half years for home care paid by Medicaid, they are protected from long-term care costs.

When applying for Medicaid, the assets of both spouses are at risk, regardless of pre- or postnup documents.

Discuss the use of trusts with your estate planning attorney. A will conveys property, but assets must go through probate, which can be costly, time-consuming and leave your assets open to court battles between heirs. Trusts avoid probate, maintain privacy and deflect family squabbles.

Creating a trust and placing the joint home and any assets, including cash and investments, inside the trust is a common estate planning strategy. When the first spouse dies, a co-trustee who serves with the surviving spouse can prevent the surviving spouse from changing the trust and by doing so, protect the children’s inheritance. Let’s say one of the couple suffers from dementia, remarries or is influenced by others—a new will could leave the children of the deceased spouse with nothing.

Many things can very easily go wrong in second marriages. Prior planning with an experienced estate planning attorney can protect the couple and their children and provide peace of mind for all concerned.

Reference: Times Herald-Record (Sep. 21, 2020) “Establishing assets, goals when planning for a second marriage”

She Won’t Do That Again: Wendy Williams Didn’t Have a Prenup

The Wendy Williams Show host filed for divorce from her estranged husband Kevin Hunter after more than 21 years of marriage, according to In Touch’s recent article, “Wendy Williams Tells Andy Cohen She Will Get a Prenup If She Ever Remarries on ‘WWHL.’” This time around, there was no prenup and it may cost her a hefty sum.

A prenuptial agreement (also called a "prenup" for short) is a written agreement created by two people before they get married. A prenup usually makes a list of all the property each person owns, along with any debts. A prenup states what each person's property rights will be, if the marriage ends in divorce.

“I didn’t think it would end, first of all, and second of all, that is not sexy to introduce paperwork when you are in love with somebody,” Wendy said during an appearance on SiriusXM’s “Sway in the Morning” at the time. “But as a grown person, I’d get with another grown person and that grown person would have a thriving career. I would choose differently this time.”

Wendy told Andy Cohen that she was back on the market, and that she’s been seeing other people, including a doctor in his 50s. The Bravo personality, Cohen, asked the DWTS alum if she was still seeing a mystery man.

“I see many men,” she said.

Andy continued to ask the New Jersey native more questions about her dating life, in which Wendy told him that her ideal guy would be between the ages of 48 and 65 and must be at least 5-foot-8. She also admitted that she still speaks with Kevin, because they share 19-year-old son, Kevin Jr. This is despite the fact that he cheated on her with his mistress Sharina Hudson and got her pregnant.

“I mean, he messed up,” she said. “But, you know, hey, life moves on.”

However, it seems like Wendy is doing just fine now. She told the audience that she likes the new Wendy, who makes good choices and is smart and strong.

Reference: In Touch (September 9, 2019) “Wendy Williams Tells Andy Cohen She Will Get a Prenup If She Ever Remarries on ‘WWHL’”

Robert De Niro Prenup May Send Shock Waves Through New York

According to a recent article in Wealth Advisor, “Robert De Niro Prenup Breakdown Can Rock NYC Real Estate (And $500M Dynasty),” Grace Hightower is claiming that the revised pre-nup makes her a 50-50 partner in all of his post-marital success. De Niro’s wealth is estimated to be around $300 million. He’s also working on a $400 million real estate development partnership with his broker son Raphael.

Grace has been with De Niro one way or another since 1987. They were married 10 years later and almost split in 1999, only to reconcile five years later.

A big issue in the divorce, is the lack of a firm prenuptial contract protecting DeNiro’s fortune.

When the couple got back together, the terms were that she would get $500,000 in cash, along with what it would take to buy her out of the marital home. She’d also get an apartment, then valued at $6 million, as well as $1 million a year in upkeep. However, unfortunately for De Niro, the contact also apparently confirmed in writing that everything he made beyond that was a partnership, 50-50.

A good prenuptial contract should be reviewed, just like an estate plan. If it’s out of date, it should be modified to something more current and defensible. The actor may have only been worth $100 million then. Now that he’s at easily triple that net worth, the numbers no longer add up the same way.

Meanwhile, he’s in deep trying to renovate an entire neighborhood of Astoria into a Hollywood-style film production hub. Purchasing the land is costing close to $75 million.

It’s not all his money. His son Raphael (from a previous marriage) is a high-powered real estate broker lining up venture investors and adding his own funds to the project.

If Grace wants $50 million or even $10 million now, DeNiro and his son could have a problem. He may have to allow Grace to participate in the new project, instead of cash.

If not, he’ll have to borrow or liquidate properties to come up with cash.

We don’t know anything about how his real estate deals are structured, but it might be worthwhile just to hand Grace participation in the new project instead of cash. After all, 50-50 partners don’t bail when there’s millions—or billions—at risk.

Reference: Wealth Advisor (June 24, 2019) “Robert De Niro Prenup Breakdown Can Rock NYC Real Estate (And $500M Dynasty)”

Before Saying “I Do” The Second Time Around, Make a Plan

Given these numbers, invest some time and serious thought to the business aspects of marriage, says Forbes in the article, “6 Second Marriage Planning Tips For You And Your Significant Other Before Walking Down The Aisle.” Start with practicing good communication, a trait that is needed to help any marriage succeed. Have a series of conversations well before setting a date to say, “I do.”

Let’s look at some tips for making sure your next marriage gets off on the right financial foot:

Be open. This means frank talk about your plans and obligations to any children and former spouses. Talk about your credit history, assets, debts and any financial support you must provide.

Look at your property. Review the assets that each of you will bring into the marriage and how they ultimately will be used or bequeathed.

Update your accounts. Be sure that all your records are up to date when you remarry.

Sign a prenup. This isn’t just to protect the assets of the wealthier spouse. It can be important if you both already have established careers, children or significant assets. A prenup lets you decide together and in advance, which assets you’ll share and those to keep separate, in case you divorce.

Work with an experienced estate planning attorney. He or she will help you retitle your investments, update your accounts and modify any beneficiaries on retirement, life insurance and annuity accounts. Since the probate laws aren’t typically designed for blended families, also be sure you create an estate plan, especially if you or your new spouse have children and grandchildren from previous marriages.

Without an estate plan, most probate laws stipulate that your assets will pass to your current spouse and then to his or her children, if you die first.

There are numerous ways that your estate planning attorney can ensure that your new spouse will be taken care of and that your assets will be passed onto your biological children, when the second spouse dies. You may both need a trust, or a marital trust to hold the assets to ensure they go to your children.

Chances are you and your intended will spend a lot of time and energy blending your families. Don’t put it at risk by failing to put a good estate plan in place.

Reference: Forbes (June 20, 2019) “6 Second Marriage Planning Tips For You And Your Significant Other Before Walking Down The Aisle”

Is a Prenup Still a Sticking Point for Kylie Jenner and Travis Scott?

Even the most glamourous people run into a few bumps on their way to the alter, and Kylie and Travis seem to have their share. She’s ready to marry, even open to eloping, say sources, but that prenup is the big unknown.

Radar reports, in the story “I Do! Kylie Jenner & Travis Scott To Wed In Low-Key Summer Wedding,” that those who follow the young couple also know that 21-year-old Kylie and Travis’ relationship has had some rocky days, after his alleged cheating scandal.

“It burns away at Kylie that they had [their daughter] Stormi out of wedlock. However, at the time their relationship was shaky and then things got pushed onto the back burner because they couldn’t figure out a prenup agreement that suits them both,” a source told Radar.

“Kylie got anonymous messages from a woman claiming to be Travis’ side piece,” a source told Radar. “The woman had no proof, but Kylie flipped out.”

Scott denied the affair and professed his love for Kylie during a show at Madison Square Garden in New York a few days later. Kylie reportedly placed some strict rules in their relationship, and they’ve patched things up.

With everything, Kylie is hop

Even the most glamourous people run into a few bumps on their way to the alter, and Kylie and Travis seem to have their share. She’s ready to marry, even open to eloping, say sources, but that prenup is the big unknown.

Radar reports, in the story “I Do! Kylie Jenner & Travis Scott To Wed In Low-Key Summer Wedding,” that those who follow the young couple also know that 21-year-old Kylie and Travis’ relationship has had some rocky days, after his alleged cheating scandal.

“It burns away at Kylie that they had [their daughter] Stormi out of wedlock. However, at the time their relationship was shaky and then things got pushed onto the back burner because they couldn’t figure out a prenup agreement that suits them both,” a source told Radar.

“Kylie got anonymous messages from a woman claiming to be Travis’ side piece,” a source told Radar. “The woman had no proof, but Kylie flipped out.”

Scott denied the affair and professed his love for Kylie during a show at Madison Square Garden in New York a few days later. Kylie reportedly placed some strict rules in their relationship, and they’ve patched things up.

With everything, Kylie is hoping she and her fiancé can exchange vows by summer. In fact, she’s even gotten some inspiration from one of the Jonas brothers.

“She loves what Sophie Turner and Joe Jonas just did and is brainstorming something similar,” the source said about Kylie’s wedding plans. “This won’t be a family-planned event though, as Kylie sees herself above the whole KUWTK [Keeping Up with the Kardashians] circus these days.”

Kylie wants to leave the family-based reality show.

“Kylie thinks KUWTK has run its course,” an informant shared. “She is just so busy with Kylie Cosmetics that she doesn’t have time to deal with the long hours it takes to film.”

One would think that with her estimated $900 million fortune, she’ll ask Scott to sign a prenup. A prenuptial agreement (or “prenup”) is a written contract drafted for a couple before they get married. The agreement will usually detail the property each person owns (and any debts). It also stipulates what each person's property rights will be after the marriage.

Even those without multi-million estates need to give serious consideration to a prenup, especially if one partner has significantly more assets than the other, or is expecting an inheritance. Speak with an attorney to prepare a prenup that honors both people’s wishes and also discuss an estate plan.

Reference: Radar (May 28, 2019) “I Do! Kylie Jenner & Travis Scott To Wed In Low-Key Summer Wedding”

ing she and her fiancé can exchange vows by summer. In fact, she’s even gotten some inspiration from one of the Jonas brothers.

“She loves what Sophie Turner and Joe Jonas just did and is brainstorming something similar,” the source said about Kylie’s wedding plans. “This won’t be a family-planned event though, as Kylie sees herself above the whole KUWTK [Keeping Up with the Kardashians] circus these days.”

Kylie wants to leave the family-based reality show.

“Kylie thinks KUWTK has run its course,” an informant shared. “She is just so busy with Kylie Cosmetics that she doesn’t have time to deal with the long hours it takes to film.”

One would think that with her estimated $900 million fortune, she’ll ask Scott to sign a prenup. A prenuptial agreement (or “prenup”) is a written contract drafted for a couple before they get married. The agreement will usually detail the property each person owns (and any debts). It also stipulates what each person's property rights will be after the marriage.

Even those without multi-million estates need to give serious consideration to a prenup, especially if one partner has significantly more assets than the other, or is expecting an inheritance. Speak with an attorney to prepare a prenup that honors both people’s wishes and also discuss an estate plan.

Reference: Radar (May 28, 2019) “I Do! Kylie Jenner & Travis Scott To Wed In Low-Key Summer Wedding”

Privacy-Loving Singer Adele Quietly Announces the End of Her Marriage

Over this past Easter weekend, the singer Adele’s representative shared the news that Adele and her husband Simon Konecki are ending their marriage. The Cheat Sheet reports that curious minds want to know “The Real Reason Adele Is Ending Her 7-Year Marriage To Simon Konecki.”

The rep’s statement was simple and straightforward. It said “Adele and her partner have separated. They are committed to raising their son together lovingly. As always, they ask for privacy. There will be no further comment.”

According to several media sources, it’s thought that the couple didn’t sign a prenup, when they married in 2011. If they opt to file for divorce in the state of California, since that’s where they own property and Konecki’s business has a base of operations, he may be entitled to as much as 50% of Adele’s earnings.

They had much in common in the beginning. However, eventually, they just grew apart. She became an international star, and he was content with being in the background. As she got bigger, her time was taken up with worldwide tours, and they just grew apart.

Adele has appeared not to care much about money. In 2016, she told Vanity Fair, “I don’t come from money. It’s not that important a part of my life.”

However, because she and Konecki have been married for seven years, half of her earnings since 2012 could be at stake, especially if no prenup was signed. A prenuptial contract is a written agreement between two people who are about to marry that sets out the terms of possession of assets, treatment of future earnings, control of the property of each and potential division, if the marriage later ends in divorce.

Experts say that what was made during the marriage will probably be divided on an equal basis.

Since both Adele and Konecki are extremely low-key and focused on their son, there’s little evidence that their divorce will turn acrimonious.

An insider told People, “Adele’s son is everything to her. Her whole life revolves around him. I just can’t see her divorce getting messy, because she’s so careful when it comes to her son. She’s always five steps ahead, in terms of how a decision will affect him.”

In other words, don’t expect too much drama from Adele, who will likely guard her divorce as fiercely as she has her marriage and son.

Reference: Cheat Sheet (April 24, 2019) “The Real Reason Adele Is Ending Her 7-Year Marriage To Simon Konecki”