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Estate Planning for Second Marriages and Blended Families

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Estate Planning for Second Marriages and Blended Families Presenting a live 90-minute webinar with interactive Q&A Estate Planning for Second Marriages and Blended Families Maximizing Tax Benefits, Incorporating Pre- and Postnuptial Agreements, and Meeting Obligations to Children and Spouses TUESDAY, MAY 19, 2015 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Kristin A. Pace, Partner, Donahue Fitzgerald, Oakland, Calif. Todd J. Preti, Principal, Midgett Preti Alperin, Virginia Beach, Va. Bridget K. Sullivan, Member, Sherman & Howard, Denver The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10. Tips for Optimal Quality FOR LIVE EVENT ONLY Sound Quality If you are listening via your computer speakers, please note that the quality of your sound will vary depending on the speed and quality of your internet connection. If the sound quality is not satisfactory, you may listen via the phone: dial 1-866-961-9091 and enter your PIN when prompted. Otherwise, please send us a chat or e-mail [email protected] immediately so we can address the problem. If you dialed in and have any difficulties during the call, press *0 for assistance. Viewing Quality To maximize your screen, press the F11 key on your keyboard. To exit full screen, press the F11 key again. Continuing Education Credits FOR LIVE EVENT ONLY For CLE purposes, please let us know how many people are listening at your location by completing each of the following steps: • In the chat box, type (1) your company name and (2) the number of attendees at your location • Click the SEND button beside the box In order for us to process your CLE, you must confirm your participation by completing and submitting an Official Record of Attendance (CLE Form) to Strafford within 10 days following the program. The CLE form is included in your dial in instructions email and in a thank you email that you will receive at the end of this program. Strafford will send your CLE credit confirmation within approximately 30 days of receiving the completed CLE form. For additional information about CLE credit processing call us at 1-800-926-7926 ext. 35. Program Materials FOR LIVE EVENT ONLY If you have not printed the conference materials for this program, please complete the following steps: • Click on the ^ symbol next to “Conference Materials” in the middle of the left- hand column on your screen. • Click on the tab labeled “Handouts” that appears, and there you will see a PDF of the slides for today's program. • Double click on the PDF and a separate page will open. • Print the slides by clicking on the printer icon. Estate Planning for Second Marriages and Blended Families Crafting Estate Plans to Incorporate Pre- and Post-Nuptial Agreements Todd J. Preti Overview “Marriage is the triumph of imagination over intelligence. Second marriage is the triumph of hope over experience.” – Oscar Wilde 6 Challenges and Issues Ethical Issues of Joint Representation Titling of Assets Beneficiary Designations Choices of Fiduciaries 7 Ethical Issues of Joint Representation Model Rules of Professional Conduct Rule 1:7 – a lawyer shall not represent a client if the representation involves a current conflict of interest. ACTEC Commentaries RE: MRPC 1.7: Some conflicts of interest are so serious that the informed consent of the parties is insufficient to allow the lawyer to undertake or continue the representation (a “non-waivable conflict). 8 Some Indications of Potential Conflicts of Interest Pre-Nuptial Agreement Post-Nuptial Agreement Either or both spouse has a child or children from a prior relationship Great Disparity in Assets of the Parties Great Disparity in the Ages of the Parties Past Representation of a Single Party 9 Issues the Lawyer Should Consider Laws of Intestate Succession Elective Share Laws Statutes favoring “Omitted Spouses” Joint Tenancy issues Beneficiary Designations on Life Insurance and Annuities Beneficiary Designations on Qualified Retirement Plans 10 Laws of Intestate Succession Statutory “will” Is the share for the surviving spouse too little or too large? How are children to be treated? Children from prior relationships? Children with surviving spouse? The spouse’s children from prior relationships? 11 Elective Share Laws Surviving spouse may be entitled to a percentage of the TOTAL estate, including non-probate assets Usually involves litigation to determine Expensive Divisive 12 “Omitted Spouse” statutes Testator made a will (avoiding intestacy) but subsequently marries Invokes statutory presumption that Testator did not intend to disinherit spouse 13 Joint Tenancy Issues Joint Tenancy with Surviving Spouse With Rights of Survivorship Without Rights of Survivorship Joint Tenancy with Children With Rights of Survivorship Without Rights of Survivorship 14 Beneficiary Designations – Life Insurance Coordinates with Pre or Post Marital Agreements? Who is in control of proceeds? Balancing economic needs Each policy must be examined and the beneficiary changed, if needed 15 Beneficiary Designations – Qualified Retirement Plans Consider Pay-out options available to surviving spouse Who controls balance, if any, at survivor’s death Trusts as beneficiaries “Oldest Beneficiary” rule for measuring lives Marital deduction issues – Battle between RMD and mandatory income payout. See Rev. Rul. 2006-26. 16 Issues the Lawyer Should Consider Presence and Effect of Pre- and Post-Nuptial Agreements Presence and Effect of Divorce Decrees and Property Settlement Agreements Buy-Sell Agreements 17 Issues the Lawyer Should Consider Family Dynamics Putting the “fun” in dysfunctional “What we have here is a failure to communicate!”- from the movie Cool Hand Luke Jealousy and Greed Control and Management Balancing the interest of “Yours, Mine and Ours” 18 Issues Relating to Children Title to Assets Joint Tenancy Without survivorship With survivorship Payable on Death or Transfer on Death Provisions 19 Issues Relating to Children Beneficiary Designations Life Insurance Annuities Qualified Retirement Plans Outright payment Conduit Trusts 20 Issues Relating to Children “Anti-Vulture” Distributions Leaving assets to children at death may eliminate potential conflict between the children (especially those from a prior marriage) and the surviving spouse by minimizing the necessity for the children to circle the spouse like vultures awaiting his/her death to “get our rightful inheritance”. 21 Issues Relating to Children Outright Distribution v. Use of Trust Structuring Distributions in Trust “Pot” or Common Trusts v. Separate shares Handling great diversity in ages of children Distributions upon attaining certain age Distributions at specified dates Who should control? 22 Issues Relating to Children Child as an Agent under a Durable Power of Attorney Conflicts with surviving spouse Conflicts with other siblings – Whole/Half/Step Compensation Issues Communication/Reporting 23 Issues Relating to Children Child as an Agent under Advance Medical Directive Conflicts with surviving spouse Conflicts with other siblings – Whole/Half/Step Dealing with the Emotional Issues Communication/Reporting 24 Issues Relating to Children Child Acting as Trustee of Trust Control over the surviving spouse’s share? Conflicts of Interest? Contempt? Communication issues Compensation Issues 25 Issues Relating to Children Child as Executor Many of the same problems as serving as Executor Requires resident of state where Decedent lived Probate as a public forum for family disharmony 26 Estate Planning for Second Marriages and Blended Families Discussion of Prenuptial and Postnuptial Agreements May 19, 2015 Bridget Sullivan, Esq. Sherman & Howard L.L.C. 633 17th Street, #3000 Denver, CO 80202 (303) 299-8130 © 2015 Sherman & Howard L.L.C. Bridget K. Sullivan, Esq. Bridget Sullivan is a Member in and the Department Manager of the Tax & Probate Department of Sherman & Howard’s Denver office. She practices in the areas of estate planning, wealth transfer planning, estate administration, trust administration, and litigation related to trusts and estates. Ms. Sullivan focuses on sophisticated estate planning techniques and prenuptial agreements. She has counseled clients on a variety of wealth transfer strategies and charitable giving techniques to accomplish family giving objectives while minimizing the impact of gift, estate, generation-skipping transfer, and income taxes. Ms. Sullivan graduated from Yale Law School in 1990. She is named in Best Lawyers in America for Trust and Estates and is named as a Colorado Super Lawyer. © 2015 Sherman & Howard L.L.C. 28 1. INTRODUCTION • The principal purpose of a marital agreement is to alter the rights otherwise provided by law of one or both spouses to the property of the other spouse, whether upon termination of the marriage by divorce or by death or both. • Many states have a marital agreement act, which determines the rights of parties who have entered a marital agreement, the types of matters that parties may agree to and the enforceability of marital agreements. © 2015 Sherman & Howard L.L.C. 29 2. REASONS FOR HAVING A MARITAL AGREEMENT • Create certainty with respect to the disposition of property at the end of a marriage. • Protect family legacy assets and provide assurance to the senior generation
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