Second marriages can present unique challenges when it comes to estate planning, particularly if you or your new spouse have children from previous marriages. Let’s take a look at some of the factors, tools, and strategies to consider when planning for a second marriage. Prenuptial Agreements You’ve been married before, so you’re a little bit older and a whole lot wiser the second (or third) time around. However, this doesn’t mean you should throw caution to the wind. While it is hardly the most romantic aspect of planning a life together, many couples should at least discuss a prenuptial agreement. This is especially true if any of the following scenarios apply: One of you is giving up a lucrative career to get married You or your future spouse owns a business Either of you has significant assets and wants to keep them separate from marital assets One of you carries
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A dementia diagnosis is a traumatic time for any family. Dementia happens slowly and progressively over time. In the early stages, some symptoms are often thought of as just signs of aging. Beginning signs can be as simple as losing car keys, forgetting where the car is parked, or even forgetting to turn off the oven. Unfortunately, dementia is incurable and progresses over time. It is important to have difficult conversations sooner than later. There are a few things you can do to protect your loved one during this challenging time. Gather Financial Documents There are several advantages to having all financial documents in one place during an early diagnosis of dementia. Dementia patients usually have difficulty remembering where they put things. It is important to not only put all financial documents in one place, but to also make copies and have them kept with a trusted member of
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Last time we looked at planning for blended families in general terms. Now let’s discuss some specific trusts that you might want to consider. One such trust, which provides an excellent form of asset protection, is called a Qualified Terminable Interest Property Trust (QTIP). The QTIP trust can generate income for the benefit of the surviving spouse during his or her lifetime. When the surviving spouse passes away, the QTIP’s assets can be distributed between mutual and prior children according to the wishes of the previously deceased spouse. In addition, if the children from the previous marriage are young, assets from the QTIP Trust can be held in another trust for the children, under the control of an independent trustee. This can prevent the assets from falling under an ex-spouse’s control. You might also want to consider a Long-Term Discretionary Trust (LTD Trust) to administer your children’s inheritance, with a
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Planning for blended families can present unique challenges, in part because the interests of a current spouse and any mutual children often conflict with the desire to provide for one’s children from a previous marriage. For example, if all of an estate’s assets are left to the new spouse, the children from a previous marriage may not be provided for in the manner the deceased spouse would have wanted. After all, there is no legal obligation to support stepchildren. Furthermore, the surviving spouse might, upon his or her death, leave all of the assets to his or her children, thereby excluding the children of the spouse who passed away first. Similarly, if assets are left only to prior children at the death of their parent, there may not be enough assets remaining in the estate to provide for the current spouse or family. Even with a harmonious blended family, failure
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It goes without saying that you and your child’s other parent should name the same guardian for your children. But what if you are divorced, or for whatever reason you and your spouse cannot agree on the most suitable guardian? Naming different guardians will lead to a battle in court should you and the children’s other parent pass away while your children are still minors. The decision over guardianship will then be in the judge’s hands. Part of the solution this situation is to leave a Letter of Explanation outlining your reasons for choice of guardian. It is important to have an experienced attorney assist you in the drafting of such a letter, but here are the basics of what should bet included: Who the children would prefer, that is, the relationship between the children and the prospective guardian Why your choice of guardian will best meet the children’s needs,
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Who should raise your children if for some reason you or your spouse is unable to do so? It’s not an easy question to answer, but if you have young children, it is a topic you most certainly should address in your estate plan. Otherwise, a court will decide, and their decision will probably not be the same as the one you would have made, and may not even be in the best interests of your children. Some of the most important issues to consider when choosing a guardian include: Does the prospective guardian have a genuine interest in your children’s well-being? Does the prospective guardian share your values? Can he or she handle the role physically and emotionally? What about financially, if you cannot provide him or her with enough assets to raise your children? Does the prospective guardian already have children of his or her own? Will he
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As we enter the 2020 tax season, however unwillingly and with gritted teeth, you might be interested to know that Americans did not always pay personal income taxes. The policy of taxing personal income began with the onset of the Civil War, when Congress passed the Revue Act of 1861. This was a new direction for a Federal tax system based mainly on excise taxes and customs duties. However, Congress soon realized there were certain inadequacies with the new income tax policy. No taxes were actually collected until the following year, when a new law was passed on July 1st. This law made important reforms to the 1861 law, many of which we find in various forms today. These include a two-tiered rate structure based on income, a standard deduction ($600), and taxes being “withheld at the source” by employers to ensure timely collection. By now you must be wondering
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Charitable giving allows you to assist the people and organizations that have come to mean the most to you over the course of your life. It represents a thoughtful expression of your values and can ensure your legacy for generations to come. If done properly, it can also be an excellent way to significantly lower taxes, so that the greatest possible amount of your gift is available for the recipients of your generosity, and at the same time, more of your hard-earned wealth is preserved for you and your loved ones. Some of the benefits of giving to charity, and the advantages of having an experienced estate planning attorney design your charitable giving plan, include: Memorializing your family name Reducing capital gains or estate taxes Supporting causes and institutions important to you and other family members Allowing you to make charitable contributions while you are alive and after you are
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Deciding whether to choose a Roth IRA or a Traditional IRA is an important decision and can have major financial consequences. Both options, however, are excellent ways to save for retirement. Let’s look as some of the biggest differences between the two. Roth IRA Your contributions are not tax deductible There is no mandatory distribution age Earnings and principal are tax free if you follow all rules and regulations Not everyone can open a Roth IRA. Individuals with modified adjusted gross incomes above $137,000 are not eligible. The figure for married couples filing jointly is $203,000 Principal contributions can be withdrawn any time without penalty (certain conditions do apply) Traditional IRA Depending on your level of income, your contributions may be tax deductible You can make withdrawals without penalty beginning at age 59 1/2. Deductions are mandatory when you reach the age of 70 1/2 When you make withdrawals from
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Maybe it’s an insurance policy you took out years ago. Or the retirement plan you set up with your employer the day you started working for the company. Or the IRA you have been scrupulously contributing to for two decades. You created them all to protect your financial future and that of the people you care about most. But over time, your personal situation may have changed. Perhaps you have gotten divorced and remarried? Or one of your children has gotten married, and you are not exactly thrilled with your new son or daughter in law? The fact is, change is a part of life. The question is, have your beneficiary designations kept pace with the changes in your life? We understand that reviewing your designations is something that’s easy to put off, the kind of chore you’ll get to “any day now.” The consequences of not doing so, however,
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