Texas Estate Planning

Post-Nuptial Agreements & Retirement Plans: Proceed With Caution

It is becoming more and more common for a marriage to start with an agreement; and we are not talking about the type of cake served at the reception. Nowadays we are seeing an rise in pre-nuptial or even post-nuptial agreements before anyone walks down the aisle. If you are considering this type of prerequisite, make sure you understand them and plan accordingly … or risk an unexpected backfire down the road.

Specifically, and in light of the recent case of Mid-American Pension v. Michael Cox, it is important to appreciate that IRAs and other specific assets with named beneficiaries and separate legal designations are just tricky when it comes to any legal planning. More to the point, pre-nuptial or post-nuptial planning for these assets can be risky, as highlighted in a recent article in The Slott Report titled “Using Post-Nuptial Agreements for Employer Plan Benefits is Risky.”

In the case of Mid-American Pension v. Michael Cox, a husband and wife came to an agreement and signed a post-nuptial agreement promising to disclaim any right to the other’s assets in the event of divorce. Mr. Cox filed for divorce (this was the third time, and they had been married to and divorced from each other twice before), but never succeeded because he passed away before the proceedings could be concluded. All the same, Mrs. Cox was supposed to disclaim everything, including his IRA, but that did not happen. The parents of Mr. Cox were the intended and designated beneficiaries of their son’s IRA.

When the not-yet-ex-wife and her in-laws went to court, Mrs. Cox prevailed because the proper protocol for disclaiming an interest in retirement funds was not followed. You see, IRAs, pensions, and the like have very specific and legally enforced requirements, and the post-nuptial agreement did not cut the mustard. In fact, a simple form from the plan provider would be necessary in this instance.

IRAs and pensions are one thing, but they are not the only assets to consider when entering into a pre-nuptial or post-nuptial agreement. Follow the “carpenter’s rule” and measure twice and cut once. There are few do-overs if the time ever comes when the agreement must be enforced.

Reference: The Slott Report (August 13, 2013) “Using Post-Nuptial Agreements for Employer Plan Benefits is Risky”

Can One Attorney Meet Both Your Estate Planning Needs?

According to the U.S. Census Bureau, the divorce rate of first marriage is around 50 percent; second marriages are at 60 to 67 percent and third marriages are at 73 to 74 percent. The fact is married couples frequently disagree … even when it comes to estate planning.

Marriage counselors stay in business because of marital disharmony. Commonly, they represent both spouses and seek to find common ground in a team approach. When it comes to estate planning, however, attorneys face a potential ethical dilemma. For example, estate planning attorneys cannot favor one spouse over the other, nor can they keep the secrets of one spouse from the other spouse in the course of “dual representation.”

While there’s no sense starting trouble where there is none, nor in approaching anything in an overly legal or litigious way, sometimes spouses really do have different estate planning interests. It’s an ethical problem for the spouses and their estate planning attorney alike, as pointed out in a recent Forbes article titled “Ethics in Estate Planning for a Married Couple.” This certainly is an issue for attorneys (and their malpractice carriers) to fret about, but also for their clients to understand and appreciate. 

Indeed, at certain junctures it might be necessary for spouses to even engage separate counsel to wrangle their way through an estate planning impasse. This happens many times with prenuptial and postnuptial agreements, but in other instances as well.

Do you not need separate counsel? Great! Still, take a moment to read the Forbes article about potential hazards.  Above all, if you choose “dual representation,” make sure you both truly are represented – and included in all attorney-client communications.

Reference: Forbes (April 26, 2013) “Ethics in Estate Planning for a Married Couple”

Necessary Planning for Children Adopted by Same-Sex Couples

Having or adopting a child changes everything. Those words really hit home when same-sex couples seek adoption in a mix of state and federal laws.

With state laws varied on the matter and federal laws as yet unchanged, same-sex adoption is far from settled.

In the meantime, same-sex couples need to define their “families” from the laws as they are. The Wall Street Journal recently provided some insight in an article titled “For Same-Sex Couples, the Finances Get Even More Complicated.” Essentially, fundamental financial and estate planning is not optional for same-sex couples.

According to the article, some 2 million to 2.8 million children are being reared in same-sex households. Now, more than ever, same-sex couples must ensure that their wills, trusts, powers of attorney and health care directives are ship-shape. In the context of adoption, this means making proper provision for the guardians of an adopted minor child. And there is a lot of need.

The lesson: same-sex couples seeking to adopt a child need to make sure all of their financial and legal plans are in place. For many, this may mean a commitment to life insurance or to a carefully-drafted estate plan.  Seek appropriate counsel for assistance in this important matter.

Reference: The Wall Street Journal (February 24, 2013) “For Same-Sex Couples, the Finances Get Even More Complicated”

Important Reasons to Review Your Estate Plan

Estate planning is not a single event, but rather a lifetime process. As long as you’re living, your life, your interests, and your plans are changing, growing, and adapting; you simply need to keep the paperwork current. It’s a good idea to review your estate planning at regular intervals. But there also are certain life events that could trigger the need for review and updates. Forbes points out three of them in their recent article, “When Should You Redo Your Will”? The top three events listed in this article include changes in the law, impending good fortune, and financial setbacks. Essentially, you really need to adjust your estate plans whenever your life or finances change. Another recent Forbes article offers the “5 Life Events That Require An Estate Planning Review.” Their handy checklist says you should review your estate plan when: 1. You get married. 2. You get divorced, or your spouse dies. 3. You purchase or refinance a home. 4. You open new savings, bank or investment accounts. 5. You have new children or grandchildren. Reference: Forbes (August 9, 2012) “When Should You Redo Your Will?” Forbes (August 13, 2012) “5 Life Events That Require An Estate Planning Review”

Estate Planning Complicated For Same-Sex Couples

“Marriage” is one word that presents practical problems when it comes to same-sex couples, let alone the words “family” or “children.” Take, for example, the legal complications surrounding same-sex unions as recently explored in The New York Times. The article, titled “A Family With Two Moms, Except in the Eyes of the Law,” found that many same-sex couples do start families and do bear children. As a result, very careful estate planning is essential, especially given current state and federal laws. For any couple with minor children, fundamental estate planning focuses on providing backup parents (i.e., guardians) to raise them and trustworthy stewards to protect their inheritance. When it comes to same-sex couples, making such provisions for minor children likely means navigating a dicey web of laws that may (or may not) tilt in their favor. To make matters even more complicated, a simple relocation from one state to another may upset your comprehensive estate planning and require a top-to-bottom review of your existing estate plans. In the end, not only must you fully define your own legal structure, but you must also do so well in advance and make changes as they inevitably occur in the law and in your life. Reference: The New York Times (July 20, 2012) “A Family With Two Moms, Except in the Eyes of the Law”

Serious Estate Planning Considerations for Those Getting Remarried in Harris and Galveston County

By: Sandra Ard Whether you’ve been divorced or widowed, there is always the chance of finding a new love and deciding you want to cement your commitment to one another. That being said, there are likely some circumstances which make this trip down the aisle considerably different than the last one. For example, you may have minor (or adult) children from a previous relationship, have an ex-spouse to take into consideration, and are likely ready to avoid any pitfalls which trapped you the first time around. An estate planning lawyer will help you review all of these aspects of your situation so you can put together a plan which protects and works for everyone involved. Children from a Previous Relationship One of the biggest reasons to engage in estate planning right away is because it ensures protection for children from a previous relationship. Without a proper will and other applicable documents, a person’s entire estate will generally pass to his or her new spouse. If that person also passes away without estate planning, the assets then pass to the stepchildren! This means there is no time at which the original spouse’s children are entitled to their mother or father’s inheritance. This fact alone is enough to send a lot of responsible parents running for a good estate planning attorney. Previous Spouses Having your children cut out of an inheritance is a pretty grim scenario, but there are problems which can arise from not following up on your estate planning when getting remarried. If you and your ex had documents drawn up (such as wills and trusts, medical directives, etc.), then he or she may still retain legal control over your affairs. Very few people would like their ex to inherit their estate or make important medical decisions on their behalf, so take the time to update your documents accordingly. Yours, Mine, and Ours There are plenty of other reasons why a couple would prefer to keep their estates separate. Perhaps they are older and each have their own savings, property, etc. which they would prefer not to co-mingle in the event of a divorce. Or, one spouse may not necessarily need the benefit of inheriting the other’s assets. In fact, such an inheritance could possibly work against him or her when it comes to long-term care planning or qualifying for Medicaid. That’s why both partners should work with reputable estate planning and prenup lawyer here in Houston and Galveston to lay a firm legal foundation from the start of their marriage to ensure their wishes are honored in the future.

Serious Estate Planning Considerations for Those Getting Remarried in Harris and Galveston County

By: Sandra Ard Whether you’ve been divorced or widowed, there is always the chance of finding a new love and deciding you want to cement your commitment to one another. That being said, there are likely some circumstances which make this trip down the aisle considerably different than the last one. For example, you may have minor (or adult) children from a previous relationship, have an ex-spouse to take into consideration, and are likely ready to avoid any pitfalls which trapped you the first time around. An estate planning lawyer will help you review all of these aspects of your situation so you can put together a plan which protects and works for everyone involved. Children from a Previous Relationship One of the biggest reasons to engage in estate planning right away is because it ensures protection for children from a previous relationship. Without a proper will and other applicable documents, a person’s entire estate will generally pass to his or her new spouse. If that person also passes away without estate planning, the assets then pass to the stepchildren! This means there is no time at which the original spouse’s children are entitled to their mother or father’s inheritance. This fact alone is enough to send a lot of responsible parents running for a good estate planning attorney. Previous Spouses Having your children cut out of an inheritance is a pretty grim scenario, but there are problems which can arise from not following up on your estate planning when getting remarried. If you and your ex had documents drawn up (such as wills and trusts, medical directives, etc.), then he or she may still retain legal control over your affairs. Very few people would like their ex to inherit their estate or make important medical decisions on their behalf, so take the time to update your documents accordingly. Yours, Mine, and Ours There are plenty of other reasons why a couple would prefer to keep their estates separate. Perhaps they are older and each have their own savings, property, etc. which they would prefer not to co-mingle in the event of a divorce. Or, one spouse may not necessarily need the benefit of inheriting the other’s assets. In fact, such an inheritance could possibly work against him or her when it comes to long-term care planning or qualifying for Medicaid. That’s why both partners should work with reputable estate planning and prenup lawyer here in Houston and Galveston to lay a firm legal foundation from the start of their marriage to ensure their wishes are honored in the future.

Simple Community Property Protection Strategy

In any marriage, and in any relationship, there is going to be a question of what’s “his stuff,” “her stuff” and “our stuff.” Question: how can you protect those assets that are not owned solely by you or solely by your spouse, but rather by the two of you as “community property?” Community property is a unique form of ownership between spouses in only nine states (AZ, CA, ID, LA, NV, NM, TX, WA, and WI).. A recent article in Forbes titled “Community Property and Creditor-Debtor Law Explained” provides a nice overview of the asset protection features of community property. The article is not only informative, but is also replete with color-coded charts. Basically, whenever an asset falls into the category of “our stuff,” a community property couple should consider a community property division. As a result, each spouse will own his or her separate property, plus one-half of what was community property before the division. From an asset protection perspective, doing so may reduce the couple’s potential risk to creditors and litigation. However, there are a number of difficulties that can arise with this kind of planning. After all, you are dividing assets long before any potential divorce or any estate property shift. In other words, asset protection is a particular attitude with which to approach planning more generally, and community property divisions have to be understood in that context. Reference: Forbes (May 20, 2012) “Community Property and Creditor-Debtor Law Explained”