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The Good Pre Nuptial

For many the phrase ‘good pre nuptial’ is an oxymoron. Aren’t all pre nuptial agreements in essence an admission of defeat and of not having faith that the marriage will last?

The short answer is ‘it depends’. One might suggest that a ‘bad pre nup’ is one in which one of the parties feels that they are ‘helpless’. The ‘weaker’ party signs the pre nup so that the relationship can move forward to a more stable level. The ‘stronger’ party feels that they must be ‘protected’ from circumstances should the relationship falter.

A good pre nuptial agreement, in actuality, protects both parties and can promote fairness in the relationship moving forward. It can, in some cases, establish the legitimacy of the ‘rights’ held during the marriage if one spouse dies.

Pre nuptial agreements can prevent inter and intra family disagreements, particularly in ‘blended’ families (where both parties have children from prior marriages).

For high net worth individuals the pre nup can promote security and fairness for both parties.

For the previously divorced or recently widowed, the pre nup can offer the knowledge that both parties are approaching the marriage for the ‘right’ reasons.

One important factor of the ‘good pre nup’ is to approach the agreement with an ‘all cards on the table’ approach to finances. Disclosing assets and debts prior to marriage means that both parties can expect honesty and integrity moving forward in the relationship.

Yes, it can be embarrassing to have to admit that you have a large outstanding debt to your ‘soon- to- be- spouse’. But it is far better to disclose that before the marriage rather than burden your new spouse with unforeseen debt at the outset of the marriage. Such a financial ‘secret’ could spell doom to the new couple.

For a ‘good pre nup’, both parties should enlist the services of separate attorneys, someone who is knowledgeable in contractual agreements. Sufficient time should be allocated prior to signing the agreement. It is no advisable to present the request for a pre nuptial agreement one day prior to the wedding date!

Because your pre nup is a legal document, make sure that it is properly executed according to all state laws. The pre nup should be in accordance with any trust documents in existence and there should be no conflicts between the documents. One simple example would be if the pre nup states that the new spouse would have financial rights to an asset, but that asset has a different beneficiary or is held as a joint asset with another party – that is a conflict to be resolved.

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To Do, Before I Do

When planning a marriage there are more romantic thoughts than those of estate planning.

An even less romantic thought it that of the pre-nuptial. However, as more marriages occur later in life or after a first divorce – there are considerations of Yours, Mine, Ours, and blended families.

I have written previously about pre-nuptial agreements (go to my website www.attorneybarbaradalvano.weebly.com and click on the sidebar – ‘prenuptial agreements’) and emphasize that such an agreement should not be entered into lightly. A prenuptial agreement is binding in courts of law and one would be wise to have an attorney review the pre-nuptial document before signing.

In addition to the presence or absence of a pre-nuptial agreement, there are other considerations for couples, whether it is a first marriage or not.

Five important elements to consider – before that walk down the aisle:

1) Talk about finances with your spouse- to- be. Do you both agree on how to handle the day -to-day expenses of a life together? What are your lifetime financial goals? Will there be budgets in place? Is one of the couple bringing large outstanding debt to the relationship? Have all taxes been filed? Are there substantial assets that one partner might choose to retain e.g. a vacation property, a boat, an antique car collection? Are there business obligations- e.g. being a ‘silent’ partner in a failing business venture? Are there outstanding family loans or obligations?

An open and frank discussion before marriage is better than ‘surprises’ at the beginning of your life together.

2) Set up wills and Powers of Attorney. If you have an old will, review it as well as all former power of attorney documents. Upon marriage you will probably want changes to some of the information.

3) Review all beneficiary forms and pensions and IRA’s. Also review documents of all your financial institutions – including the access to safe deposit boxes.

4) Now might be a good time to decide who will be responsible for the day- to- day payment of bills. Take stock of all credit cards and see if there is ‘overlap’ ; for example do both partners require the same credit card account or should it be a joint account? Remember to discuss outstanding credit card debt and how that will be handled going forward. Are there auto lease agreements? College tuition for children? Are there financial obligations for aging parents? Have you made a loan to a family member that is outstanding?

5) Take stock of all valuable collections, for example art. Will it ‘fit’ your life together? Should the collection be sold off prior to marriage?

You will probably agree that all of the above is not very ‘romantic’ conversation.

But in planning your “To Do” list together, the opportunity to reach agreement is better than difficult discussions or disclosures after you say “I do”.

Working To Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

Please read my full disclaimer and How I Can Help You

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Pets, Probate and Pre Nups

Here is a previous post about Pets and planning for the future.

In most states, money and other assets cannot legally be left to “non humans” in a will. This, of course, is a simplified version of the law, concerning Pet Trusts and pet trust law. I decided to write this brief article after reading about Lauren Bacall. Sadly, the great actress died recently and she left behind her cherished dog, Sophie. Ms. Bacall left funds so that Sophie could be cared for.

Concern for the care of pets when the owner dies is a topic that has become more prevalent in the past decade. According to the HSUS (Humane Society of the United States) there are about 179 million cats and dogs living in family households. Pet trusts are entering the estate planning landscape and I foresee that they will become an increasingly larger part of Estate Planning. One reason for this is that companion animals have become an integral part of family life, and as such, their owners/carers/pet parents want to provide for them.

Here in Colorado, there is Colorado Revised Statute Law 15-11-901 (1994 amended 1995) under Title 15. Probate, Trusts, and Fiduciaries. Within that Colorado statute is “Honorary Trusts; Trust for Pets”

An article by Kim Bressant-Kibwe, Esq. on the ASPCA (Association for the Prevention of Cruelty to Animals) website www.aspca.org titled “Pet Trust Primer” gives a very good synopsis of Pet Trusts.

Pet Trust Law statutes vary from state to state and there are still a few states that do not allow the establishment of pet trusts.

There are often funding limits as well as term limits placed upon the pet trust.  To give an example – the trust may exist until the death of the animal beneficiary or for a maximum of 21 years.

Another point to keep in mind is that in Colorado, all trusts having its principle place of administration in Colorado shall, within 30 days following trustee acceptance of trust, shall register the trust in the Court of Colorado, this includes trusts established for pet.

Another issue surrounding pets is the growing number of pre-nuptial/marital agreements/contracts that include terms for “who gets to keep the pet(s)” if the marriage dissolves. These co-called “pre-pups” help to avoid costly litigation between the two parties and often they even outline the visiting arrangements for the pet(s).

Working to Preserve Your Wealth and Protect Your Future… in a Constantly Changing World.

This post has been brought to you through the Law Office of Barbara Ann Dalvano. This information is provided for educational purposes only and to generate ideas, provoke thought and facilitate conversation. It is not intended to create an attorney-client relationship. Each person’s situation is different and this information should not and cannot be relied upon as legal, tax, accounting or investment advice. Please read the entire disclaimer for more important information.

 

 Visit our website at www.attorneybarbaradalvano.weebly.com.for more articles and informative infographics

The Blended Family-Challenges and Rewards

There are very special considerations with respect to Estate Planning for the blended family.  While many “step-families” do manage to get along harmoniously, there are other issues to deal with when “merging” step-family finances and resources.

Couples who are planning re-marriage and preparing to “blend” their families face unique challenges and they would be wise to consider certain complexities before “tying the knot”.  One major factor is the financial arrangements that are planned for the ex-spouses and/or their families. In the case of two divorced individuals with young children, the question of “yours, mine and ours” is critical.  Longer term issues such as those of child custody/care; education expenses; college debt; past bankruptcies and credit scores; alimony; outstanding loans; investments; real estate and the legal matters of future inheritance require that couples share all personal information with their intended spouse.

In addition, an estate plan needs to be in place in the event of one partner being disabled or deceased in the future.  How will the new “blended” family function? For example: Will the step-parent take on the full responsibilities of all step-children if an ex-spouse were to die?  Have commitments been made for future eldercare? Have certain assets been promised to others?

If the task of successfully blending a family seems overwhelming, it does not need to be.  Start with the basic elements of gathering all the individual financial information of both partners.  This would also include any existing wills, trusts, and beneficiary documents.  If a family business is involved, those documents are essential to the review process.

Then, find competent professional help to review the information.  Realize that full disclosure is essential at this stage.  After the re-marriage is not a good time to find out that one of the couple previously has been party to a foreclosure; co-signed a loan or has any major financial problems.  Remember, that both parties after the marriage will be assuming certain joint responsibilities.

A qualified tax planner; a financial advisor and an estate planning attorney are essential members of the review “team”. Often, addressing sensitive issues is easier when using an “intermediary” (like an experienced estate planning lawyer) who can analyze any legal issue and ask pertinent questions.  An Estate planning attorney also has access to other qualified financial advisors; CPA’s and real estate advisors if required.  Most estate planning attorneys have the expertise necessary in working jointly with those professionals. If you need to find an Estate Planning attorney, a good place to start is with the ACTEC, an organization for estate counsel.  You can check the credentials of an attorney through AVVO.com- an organization that ranks the qualifications of attorneys.

There are studies that suggest that many adults have a stronger sense of obligation to their biological family than to the step-family.  Which is why, in order to obtain a fair and harmonious balance for couples in a blended family, it is advisable to use professional legal counsel to work out the solutions.  Consider also, if there is major disparity of assets or income, that both parties discuss pre-nuptial agreements.

All of this should be done prior to “setting up house” together.

View my full disclaimer and the section “How I Can Help You” at the bottom of this page.

Working to Preserve Your Wealth and Protect Your Future in a Constantly Changing World.

This post has been brought to you through the Law Office of Barbara Ann Dalvano.  This information is provided for educational purposes only and to generate ideas, provoke thought and facilitate conversation.  It is not intended to create an attorney-client relationship.  Each person’s situation is different and this information should not and cannot be relied upon as legal, tax, accounting or investment advice.  Please read the entire disclaimer for more important information.

Barbara Ann Dalvano, Esq.

Phone and Text Message:  (719) 963-2933

Email Address:  barbaradalvano@yahoo.com

Feel free to visit our website at http://www.attorneybarbaradalvano.weebly.com.

The Pre-Nuptial Agreement and the ‘Confidential’ Marriage

As part of my practice area, I structure and review ‘pre nups’ (pre-nuptial agreements) for clients who are preparing to tie the knot (for the first, second, or third time.)  So it was with interest when across my computer screen came an article/posting from a New York divorce and family law attorney named David Centeno.  The title of his article grabbed my attention: “10 Common Prenup Pitfalls” (11/04/2013) The article was well written and enumerated the list of the ten common problem areas and also why one should not consider using a prenup “template” for your prenuptial agreement (or write a pre-nuptial agreement on the back of a paper napkin!).

Pre-nuptial agreements are legal documents, enforceable (and sadly sometimes unenforceable) according to very specific points of law.  One salient fact to note is that it is always advisable to have separate legal representation for the prenuptial agreement (both people having their own separate attorney to review the agreement.) Thus, the legal rights of both parties are equally represented. Whether to use a pre- nuptial agreement is a matter of personal conscience, but often such well-crafted agreements can avoid future difficulties more often than they create conflict.

Which leads me to the issue of the marriage document itself, again a legal document.  Most people entering into marriage do so with the intention of letting EVERYONE know about their new blissful state.  However, in the state of California there is something called the ‘confidential marriage’ (in existence since the 1870’s).  The original intention was purported to be that for those couples living together in a ‘state of unwededness’ – if there was such a word as unwededness- the confidential marriage allowed the couple to get married without having to announce that they had not been married in the past.  Thus, there was a mechanism for the partnership to become ‘legal’ in the eyes of church and law and not have the couple embarrassed in the eyes of their community.

Nowadays, one reasoning to have a confidential marriage is that it is…well…confidential.  No one, not even relatives or the paparazzi, would have access to the marriage document – only the two consenting parties. Very useful if you are a famous celebrity.   You can access more fascinating details about the rules of a confidential marriage (only in California) via www.losangelesmarriagelicense.com   Apparently, Michigan has something comparable which they title the ‘secret marriage’.

The one significant issue about the ‘confidential marriage’ is its potential for misuse, particularly amongst the elderly.  There was a point made that an unscrupulous caregiver to an elderly person could use the secrecy of the document for nefarious purpose – marrying their patient/client (in secret) and then claiming an inheritance as the legal spouse.  The family of the elderly person would have had no way of knowing that the ‘confidential marriage’ even existed. Again, only California has the “confidential marriage”.

Working to Preserve Your Wealth and Protect Your Future in a Constantly Changing World.

This post has been brought to you through the Law Office of Barbara Ann Dalvano.  This information is provided for educational purposes only and to generate ideas, provoke thought and facilitate conversation.  It is not intended to create an attorney-client relationship.  Each person’s situation is different and this information should not and cannot be relied upon as legal, tax, accounting or investment advice.  Please read the entire disclaimer for more important information.

Barbara Ann Dalvano, Esq.

Phone and Text Message:  (719) 963-2933