Attorney & Mediator
Attorney & Mediator

Prenuptial Agreements – Myths

Here are some common myths surrounding Pre-Nuptial Agreements.

#1 Only Men Want Pre-Nups.

Not true.  In today’s economy, many women earn as much or more than their male counterparts.  She may have accumulated real property and substantial monetary assets before marrying.  Additionally, it will protect the woman if she is agreeing to stay home and raise a family while the husband works and continues up his corporate ladder.

#2 Pre-Nups Only Help if We Divorce

Not true.  While there are provisions contained in the Agreement speaking to divorce, there are also provisions which address the issue of death.  They can mirror your estate planning documents such as your Revocable Trust or Will concerning the distribution of your estate upon your death.  If you have children from a prior marriage, you may want to provide for them upon your death as opposed to leaving all of your wealth to your new spouse.

#3 Pre-Nups are Too Expensive.

Again, not True.  While they are costly, it is another expense of the wedding process (which itself is not inexpensive).  The bigger issue is that the money that you and your estate may save by having a well thought out pre-nuptial agreement would greatly outweigh the money spent in developing one.

 

Planning For The Same Sex Couple – Legal, financial and medical matters.

Alternative families have a greater need to plan than any other.  The laws have not caught up with lifestyles and family-styles.

Jointly owned property goes to the survivor – so if you own real estate – this can be an area easily addressed.

Other assets take planning.  It is important to look at your investments.  Do you have them payable on death to your partner?  Do you have a will or a trust that leaves them to your significant other?  If not, then it is possible that your biological family will take these assets upon your death – even if you did not intend that to happen.

Retirement benefits are another area that are important to examine.  Some cannot be “fixed” even with estate planning.  Social security benefits are only available to surviving spouses.  Many pension plans will only permit distribution to surviving spouses as well.  Check your plans!

Other retirement benefits such as 401K’s, IRA’s, Roth’s and Annuities can be left to surviving partners.  Take the time to check your beneficiary designations to assure that they are up to date.

Powers of Attorney are a very important tool for the same sex life partner.  Without these in place, your significant disability could result in a request to the Probate Court for a Guardianship or Conservatorship.  It is likely that the Court would honor such a request by your biological family.  Is that your desire?

Who would you want to handle your financial and legal affairs in the event of your disability?  If it is your partner, make sure that you have a Durable Power of Attorney in place that names him or her.  That will assure that affairs will be handled in the manner that you chose in the case of your disability.

Who would you want to have access to you and your medical information in the event that you were critically ill and unable to communicate?  Who would you want to direct your medical care?  Without a Patient Advocate Designation (also known as Patient Directive or Durable Power for Health Care) your partner may be shut out of the process once you are hospitalized.

Each of these is a small but critically important issue to attend to if you want to protect yourself in the event of a disability or your partner in the event of your death.

Pre-nuptial Agreements – Does this mean you don’t trust me?

One of the major objections that is cited by individuals who are getting married to looking at a pre-nuptial agreement is that it shows a lack of trust.

The opposite is actually true.  A prenuptial agreement can only be created in a trusting relationship when both individuals  feel confident enough to offer “full disclosure” regarding their assets and debts. These “intimate” revelations often open the door to resolving other important issues.

More marriages break up over money issues than any other reason.  If you are unable to frankly and honestly discuss the hard issues – especially concerning money and debts – the marriage is beginning on an uncertain footing.

When both parties are able to lay all of their cards on the table – they are placing trust in one another.  They are starting the marriage off on a solid playing field.   It eliminates any doubts or nagging questions concerning financial affairs.

Personal Property – Dividing it up – Can this Really be a Problem?

While not an area of the most litigation, the division of personal in an estate is the one that leads to the most hurt feelings and family fights.

You may think that your children or nieces and nephews are reasonable, loving people who will be able to sort out the spoons and the jewelry – there are more splintered families out there that started with just such a disagreement.

Worried about the division of the big items – those that have value to you – may not be the end of the story.  It may well be small sentimental items that you didn’t know meant anything to anyone that are disputed.

There are sisters who are not speaking because of a harmonica that they remember dad playing when they were children or a small, chipped, glass nicknack that sat on grandma’s dressing table that they all want.

How can you resolve this in advance?

First – talk to your family!  Ask what each of them would really like that you own.  It may prove enlightening.  The items that you thought would be wanted by everyone are wanted by no one.  Although a family treasure has great sentimental value to you doesn’t mean that it will have the same importance to others.

Then, make a Personal Property distribution list and place it with your Last Will and Testament – remember to sign and date it.  Set out in detail which items are to be distributed to each of your loved ones.

If you have a number of similar items – grandma’s teapot or gold rings – take a photograph and put it with the listing so that it is clear which teapot or ring goes to which family member.

Specify how the rest is to be distributed.  Perhaps the children should draw straws or permit them to chose in birth order.  Then each child selects one item, going round and round until all desired objects are gone.

However you chose – make sure that you address this very emotional area of your estate plan.

Estate Planning and Pets – How to care when you are not there

What about your pets?  Who will care when you’re not there?

To some, the issue of pets seems at best foolish when we are discussing the serious topic of estate planning.  To those that are pet owners and animal lovers – it is not foolish – it is important.  Many love their pets as much as they care for their relatives (often more).

Often, as we grow older and our families have moved away, our pets become our family – giving us love and companionship.  They are vulnerable and will need care when we are unable to be there to care for them.

First, not everyone is willing to adopt our cat or dog after we have passed away.  You cannot count on your children to automatically bring the pet into his or her home.  As with many issues in the estate planning process, it is important to discuss this matter with your family members.

Ask today whether they would be able and willing to care for your dog or cat in the event that you were unable to do so yourself.  You may find that it is a family friend that is able to take on the responsibility of caring for your beloved pet for the rest of its life.  This is not the type of responsibility that someone should be surprised with.

Next, you may want to consider setting aside some money for the care of your pet.  You may want to give the money as a direct bequest (gift) in your Will to the individual that will be caring for your pet.  Alternatively, you may leave a sum in your trust that can be administered by your trustee for the ongoing care of your pet.  Some people simply designate an account or a certificate of deposit for that person, making the account payable on death to the care giver.

Why set aside money?  Taking care of a pet responsibly means veterinary bills, medications, food, toys, and possibly kennel fees during vacation times.   It is only appropriate to consider this when asking for another’s kindness in caring for your pet.

By taking care of this detail today, you will feel a sense of relief knowing that while your friend and companion will miss you, he or she will be well cared for.

Joint Ownership Alone as an Estate Plan – a Costly Mistake

Many individuals, in order to avoid legal fees and avoid their estates going to Probate Court – put all of their assets in joint ownership with other family members.

Does this work?  Sometimes it works just fine.  Sometimes it creates a massive legal and financial mess.

EXAMPLE #1

Mom, a widow, places her home in joint ownership with a son to avoid Probate.   What could go wrong?

• If mom wants to sell the home and move into a condo, her son could refuse to sell – he now has an ownership interest and she needs his agreement

• If son has legal difficulties – a car accident over his policy limits or a business deal gone bad – mom’s home could be a target for creditors.

• If son fails to pay his income taxes, the IRS could lien mom’s property

• If mom and son are in a fatal accident together – who gets the property now?

EXAMPLE #2

Mom, a widow, has three children.  She has three bank accounts and places each one of them in joint ownership with a different child.  What could go wrong?

• One of her children goes through a divorce.  That child must now list that account as an asset when he/she is dividing assets as part of the property settlement process

• Mom uses all of one account, half of another, and doesn’t touch the third.  Does that mean that she wanted one child to get all of the money in the one account? The second child to get the 50% remaining in the second account? And the third child to get nothing?

EXAMPLE #3

Mom, a widow, has three children.  She places all of her assets in joint ownership with one child because she knows that this child will “do the right thing” and share the assets with the other two.  What could go wrong?

• Mom gets sick and arguments break out over the type of care that mom should have – some siblings want her to go to a nursing home and others want to preserve mom’s money – the kids end up not speaking.  Upon mom’s death, the child on the account, angry with the other two announces that legally she is entitled to the money and the house as she is joint – leaving the other two with nothing.

• Mom gets sick. The child on the account cares for mom during her illness and disability without much assistance from the other two.  Upon mom’s death, the child on the account, angry that the others would not assist with mom’s care  announces that legally she is entitled to the money and the house as she is joint – leaving the other two with nothing.

• Mom gets sick.  A child other than the one on the accounts cares for mom during her illness and disability without assistance from the other two.  Angry words are exchanged concerning the appropriateness of mom’s care and the amount of mom’s money that is actually being used up when she is in a child’s home.  Upon mom’s death, the child on the accounts announces that legally she is entitled to the money and the house as she is joint – leaving the other two with nothing. And leaving the child who was the care giver out in the cold.

These are the unintended consequences that occur from joint ownership as an estate plan.  These things really do happen.

You have money hidden everywhere – where is everywhere?

The tales are endless.  Survivors from the Great Depression don’t trust banks – so they hide their money everywhere.  The problem is – we don’t know where everywhere is.  If this is your estate plan – please leave a map which shows where your “everywhere” is.

• The tale is told that in Northern Michigan that a woman got ill and was hospitalized.  While she was in the hospital, her children thought that it would be a nice idea to remodel her bedroom.  They purchased new furnishings, carpeting, linens and curtains.  When she returned, the woman loved her new room – she was grateful.  Where, however, she asked, is my mattress?  It had been thrown out.  She was hysterical when she received that news because she had hidden over $100,000 of cash inside of the mattress.

• A young couple purchased an old, distressed home for a song.  It was in unbelievable disrepair after a number of owners had failed to maintain it.  So they began the remodeling process.  Imagine their surprise when they pulled up the old, threadbare carpeting and found thousands of dollars under the carpet padding.

• A son was cutting the grass around his deceased father’s home to get it ready for sale.  As he was week wacking he noticed a half buried pipe with a capped end.  He thought nothing of it and continued to trim the grass, until he came to the other end of the same pipe, also with a cap.  A pipe that went no where.  He opened up the pipe to find cash and stock certificates.

Yes, people hide their money in the strangest places: band-aid boxes, frozen food boxes in the freezer, between the pages of books, behind pictures in frames.

So a note to those left behind – be careful when throwing out old junk – it may contain a fortune.

And also a note to those who hide money everywhere – please leave a note behind to tell us where everywhere is.