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Written by Jerry Tahajian
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September 02, 2011 |
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Legal fees range from $2,500 to well beyond for complicated economic and family issues. Thus, it's best that the parties discuss as much as possible and come to some tentative resolution before the lawyers get too far into things. I stress "tentative" because the attorneys may say something that willl change one or both minds.
How long will the surviving spouse be allowed to remain the house after the other spouse dies? It could be until she/he dies or could be a year or less. Each situation is different.
Be very careful about the debts that one spouse brings into the marriage. Although the debt-free spouse has no legal liability to pay them, it could cause great strain and affect the emotional relationship and the debt-free spouse may find themselves "forced" to help pay just to keep the relationship positive.
A wealthy spouse can provide for a less-wealthy spouse and then the remaining assets can be distributed to the wealthy spouse's children via a Trust arrangement. Life insurance is sometimes used to assist in these cases.
Also, be sure that the parties' wills and trusts are in synch with the Prenuptial Agreement and consistent with it.
Family heirlooms can be the most valuable items to some people and need to be specifically described in the Agreement to prevent problems after the death of a spouse.
I also recommend that the Agreement be shared with family members to prevent it "loss" after one spouse dies and to also reassure the children that matters are well in hand.
Jerry
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Written by Jerry Tahajian
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September 01, 2011 |
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People who have children from a previous marriage and/or significant assets should consider a prenuptial agreement which spells out what happens upon death or divorce.
Raising the issue of having a prenuptial agreement needs to happen early in a relationship to allow plenty of time for both parties and their attorneys to complete the process with a minimum of emotion to figure out how to resolve financial and other matters.
Both parties need to fully disclose all of their assets and values or the agreement will be deemed void. All debts and sources of income must also be disclosed.
Each party must have their own attorney to eliminate any conflicts of interest.
More about Prenups tomorrow
Jerry
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Joint Tenancy Supercedes Your Will |
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Written by Jerry Tahajian
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August 31, 2011 |
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Will provisions do not control the distribution of assets that are held in Joint Tenancy.
Assets, such as your home, stock and bank accounts, held in Joint tenancy will be owned by the person or persons who are Joint Tenants with you. So if you are in a second marriage or have a "significant other" relationship and have a Will that gives a portion or all of some assets to your children by the previous marriage, they wont get anything if your new spouse or significant other are listed as Joint tenants. In fact, your Will could say that you are disinheriting the new spouse or anyone else, and it wont make any difference because Joint Tenancy trumps your
Will!
The same rule applies to beneficiaries of your IRA and/or 401K and life insurance: The beneficiary designation trumps your Will when there's a conflict.
Be very careful in adding other people's names to bank accounts, stock accounts and real estate without first checking with your attorney. What you assume may not be true with respect to gifting of those assets during life and at death.
Jerry |
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Will Your Heirs Know What To Do? |
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Written by Jerry Tahajian
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August 30, 2011 |
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Where is your Trust/Will that you spent so much time and money to put together? Tell your children. If you have a safe deposit box, be sure someone other than you has access.
Who/where should your children call to do things and get things such as the CPA and attorney, life insurance claim forms and such?
Sometimes life insurance premiums are paid by direct transfer from a bank account, and if the account is closed before the parent dies the life insurance will be terminated for non-payment. A similar thing happened to one of my cients: The son moved and the next year's life insurance statement for his father was not forwarded to the new address and it was eventually cancelled for non-payment. It cost the client about $150,000!
Is your funeral prepaid? Where is the information located? Do you want a party or cremation or music or what? Write it and deliver!
If you have long-term care insurance, be sure that information is available because you may not be able to communicate anything.
Where did you hide something?
Who knows your computer password? Safe combination? Location of automobile ownership certificates?
One of the biggest mistakes is when people forget to update the beneficiary designations on IRAs and pensions when their first choice previously died. Or they left a previous spouse on as the beneficiary!
Jerry |
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Estate & Gift Tax Exemptions |
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Written by Jerry Tahajian
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August 29, 2011 |
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The Federal Estate and Gift Tax Exemption is $5,000,000 per person for 2011 and 2012. After that it is scheduled to decrease to $1,000,000.
Will Congress extend the current law? The Kiplinger Tax Letter believes that the current exemption and rates will be extended, but that it will probably be late in 2012 before we know for sure. In the meantime, tax advisors and their clients will be in limbo. However, if clients have been considering making large gifts, do so before 2013 to remove future appreciation from the donor's estate in the event Congress does nothing.
Also remember that the annual gift tax exclusion is $13,000 per year to everyone without a reduction in the lifetime exemption.
Donees pay no gift tax irrespective of the amount of the gift during life or at the donor's death. Only donor's pay gift tax, if any.
Jerry |
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