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Though the decision to secure your own representation for estate planning may appear to be a simple financial one, the reality is that the choice touches on a variety of deeply personal issues in your relationship. Don’t let emotions get in the way of your speaking up and doing what you need to do to protect your family’s future. |
The 6 key things to consider
A recent article at Forbes.com highlighted some of the issues surround estate planning as a married couple. Getting your affairs in order is crucial to securing your family’s future. (And when blended families are involved, it’s especially important. If a parent remarries, all too often disputes arise following the death of a parent.)
The issue the Forbes article raised is an interesting one: should you work together with one attorney or should each of you get your own representation for estate planning purposes? While it’s certainly true that joint representation is more cost effective in the short term, it can also create issues between the couple, especially if underlying trouble already exists. Joint representation can spell disaster if the couple has problems communicating generally.
The Forbes article mentions the following things to consider when deciding whether you should go it alone or work together when crafting an estate plan:
1. Only one party has children
It’s no surprise that the vast majority of people want to leave their estates to their children. The problem that can occurs is if the other spouse has no children of their own then the parent may fear dying first and leaving their kids empty handed.
2. Disparities in income
A large income gap between spouses can affect joint planning and may be a good reason for each of you to go your own way.
3. One of you typically runs the show
If one party dominates the other in every day interactions, it can spell trouble when the estate planning process begins. A communication breakdown can leave one spouse upset with the final deal, believing his or her opinions were never fully considered. A skilled estate planner should recognize this imbalance and suggest that the parties consider finding separate representation.
4. Length of the marriage
This one’s pretty obvious: the shorter the relationship, the greater reason to get separate attorneys.
5. The number of prior marriages
The author of the Forbes article believes that a solid rule of thumb says that the greater the number of prior relationships a person has, the greater the need for separate representation when it comes time to make plans for the future.
6. Large age gap
The bigger the age difference between you and your spouse, the bigger the reason to contemplate solo representation. The suggestion that you seek separate representation is not meant as a critique of your relationship’s health; it’s meant only to acknowledge the fact that you both are in very different places in your lives and, as such, face unique concerns that can be best addressed with your own estate planning professional.
Though the decision to secure your own representation for estate planning may appear to be a simple financial one, the reality is that the choice touches on a variety of deeply personal issues in your relationship. Don’t let the complicated emotions get in the way of your speaking up and doing what you need to do to protect your family’s future.
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Source: “Estate Planning For Couples: Should It Be A Solo Or A Duet?,” contributed by by L. Paul Hood, Jr. and Emily Bouchard in the column by Deborah L. Jacobs, published at Forbes.com.
All the best,
Many years ago the prevailing estate planning philosophy was that keeping assets in trust for a child’s lifetime was administering from the grave. Today, more people view it as providing security for children and grandchildren in a more unsettled world.
Sometimes, you may want to deny your child complete access to your funds. So let’s examine three reasons to keep assets in trust for your child.
1. Insulates assets from creditor claims and divorce proceedings
Money held in trusts is off-limits to the beneficiary’s creditors and from a divorcing spouse during divorce proceedings. For example, if your child starts a business and he or she guarantees a loan and the business fails, the bank can’t attach the assets in his or her trust. If your child gets divorced, the divorce court isn’t permitted to give his or her spouse trust property.
If a child received all trust assets on reaching a specified age and kept the assets solely in his or her name, almost all states would not consider this property marital property. Thus, the spouse would not be entitled to any of the trust assets after a divorce. But if your child puts the money in joint tenancy with his or her spouse, the assets would be considered marital property in most states, and the divorce court could give the spouse a percentage of the assets.
2. Keeps property in the family
If your child has the right to withdraw his or her entire trust after reaching a specified age, he or she is free to dispose of those assets any way he or she desires. If your child decides to put the money in joint tenancy with his or her spouse and predeceases the spouse, the assets will go to the spouse as a surviving joint tenant.
This should not be problematic because the spouse will, in all likelihood, take care of any children (your grandchildren) she has with your deceased child. But if the spouse remarries, puts all the trust’s property in joint tenancy with a new spouse, and then predeceases that spouse, all the assets would pass to the new spouse and your grandchildren would receive nothing.
Keeping the funds in trust for your child ensures that, on his or her death, the trust’s assets will either be distributed to or continued to be held in trust for your grandchildren rather than being bequeathed to your child’s spouse.
3. Provides for a trustee to control asset distribution
By keeping your assets in trust you may name a trustee to invest the money and control distribution of trust income and principal to your child. If you’re concerned that your child may not be capable of correctly investing the trust’s assets, you may choose an individual as a trustee who either knows how to invest or would hire someone who does. You also may hire a bank or a trust company to act as trustee.
If you believe your child may spend the money irresponsibly, you can authorize the trustee to make asset distributions according to the trust’s terms. You also may direct the trustee to distribute property only when your child reaches specific incentives, such as graduating from high school or earning a college degree.
Finally, you may name your child as a co-trustee when he or she reaches a specific age. As a co-trustee, your child can learn the ins and outs of investing assets from the trust’s trustee.
Many more benefits
These are but three reasons to consider leaving assets in trust for your child. Many more benefits may exist depending on your situation. To learn more about these versatile estate planning vehicles, please give us a call.
All the best,