Family Law

Divorcing Late In Life? Estate Planning Considerations You Need To Know.

Unfortunately, “till death do us part” doesn’t seem to have the same weight or meaning that it had back in the day. Per the American Psychological Association, more than 90 percent of people marry by the age of 50, however, more than 50 percent of marriages end in divorce. Further, the divorce rate for subsequent marriages is even higher. An often-neglected aspect of divorce is the chaos it often makes of a well-crafted estate plan. Usually, the consequences of divorce in the context of estate planning isn’t realized until too late and significant time and money are wasted. The good news, however, is that these problems are easily avoided with a little foresight, or at least competent counsel from your Ohio estate planning attorney. Note, your estate planning attorney can only protect you if he knows what is going on, so, if any significant life events have occurred recently in your life, call your attorney and see if anything needs to be done.  

  • Why divorce matters in estate planning.  

First step in fixing or avoiding a problem is understanding what the problem is. So, why is divorce so significant in the context of estate planning? At the end of the day, it all focuses around who gets what and when. With marriage, in the eyes of the law, two people become one. Thus, both are owners, and both have entitlements when they split. Figuring out a fair split of all the property of marriage is regularly a contentious, long, and expensive process.  

This commingling of assets is what makes divorce so difficult, even if prenuptial agreements are in place. What’s considered separate property? What’s considered joint? Definitions vary by state, but in general separate property includes any property owned by either spouse prior to the marriage and any inheritances or gifts received by either spouse, before or during the marriage. Trusts can be used to house assets in separate ownership from a spouse, but this is not an airtight defense. Careful management and access restrictions must be drafted in the trust documents because, in the event of divorce, you can bet your bottom dollar your soon-to-be ex-spouse’s attorney will use all his wit and guile to get at whatever is in trust. 

On the opposite side, marital property is typically any property that is acquired during the marriage, regardless of which spouse owns or holds title to the property. This is almost always subject to equitable division during divorce, again, a prenuptial is no guarantee, recent case law is full of court decisions disregarding these agreements for a variety of reasons.  

Always remember that marital property isn’t just houses and cars but also pension plans, 401(k)s, IRAs, stock options, life insurance, closely held businesses and more. Further, if separately owned property increases in value during the marriage, that increase is also considered marital property. As a rule, if something holds value, it will be fought over during divorce.  Due to the complexities involved when it comes to dividing assets, a marital property agreement can help clear up any confusion surrounding the ownership of assets, but this alone is insufficient protection if you fall on the wrong side of the 50 percent divorce rate.  

  • Divorce Estate Planning Strategies  

After the long and arduous task of dividing assets, the next step is to reorganize an estate plan to match the new realities of your life. After divorce, but especially if remarriage is a possibility trusts should be established to protect your self-interests and children of your previous marriage, wills must be rewritten, often to at least counter an existing will which named a now ex-spouse as executor, and beneficiary designations must be changed, designations which often were made years ago and given little, if any, thought.   

  • Establish Trusts  

A trust, to put it simply, is a private agreement that allows a third party, a trustee, to manage the assets that are placed inside the trust for the benefit of trust beneficiaries. There are innumerable types of trusts, each with own its respective legal conventions and purposes. Trusts come in many forms and are established to accomplish many different things. A revocable living trust fits most situations and can serve as the foundation of your estate plan. While not all trusts are created equally and not all trusts afford the same level of protection, without fail trusts provide greater protection for beneficiaries than outright distributions. 

  • Update Beneficiary Designations 

To guarantee your estate planning goals are met and your money goes where you want it to, ensure that all beneficiary forms and designations are updated following marriage, divorce, or re-marriage. Life insurance proceeds and retirement accounts often represent significant portions of your estate, as such, beneficiary designations should generally pay the proceeds to your trust, if designated correctly. Trust utilization allows control while allowing these proceeds pass directly to an individual represents a risk of mismanagement or squandering. 

  • Update Last Will and Testament  

At the beginning of every will there is language specifically disavowing all previous wills and codicils. This is included as boilerplate language because people forget to do it regularly. In the same vein, especially in the context of divorce or remarriage, update your will to reflect your current familial situation. Personal property bequest, executor appointments, and guardian designations all should be current and accurately reflected in your will.   

  • Adequate Bookkeeping  

Knowledge is power and what you don’t know can hurt you. Regularly go through documents, make important designations current, and account for all of your assets. Outdated information and kill a well-drafted will, trusts, and/or beneficiary designation form. Oversights and neglect can cause estate planning headaches that are easily avoided with a little effort and regular meetings with your Cleveland estate planning attorney. 

Helping You and Your Loved Ones Plan for the Future

Cleveland divorce lawyer

Should I Get a Prenuptial Agreement?

Cleveland, Ohio Attorney
Do I Need a Prenuptial Agreement?

If you’re getting married, a prenuptial agreement may have crossed your mind. Many people fear that bringing up the word ‘prenup’ will cause tension in a relationship, but often times it actually helps to talk about your finances before getting married.  After all, most people get divorced because of one thing – finances. Knowing and understanding your spouse’s financial situation may relieve tension and future arguments if things don’t work out. Nonetheless, entering into a prenuptial agreement is a very personal decision. Consider these pros and cons and compare them with your circumstances.

Pros of a Prenuptial Agreement
• Assign debt such as credit cards, school loans, and mortgages. Often times, student loans will be fought over in the event of divorce. Attorneys use debt negotiate the terms of the divorce.
• Reduce conflicts during a divorce.
• Document each spouse’s separate property compared to ‘marital property.’ Separate property is not included in spousal support in Ohio.
• Distinguish between what is marital and community property.
• Support an estate plan and avoid court involvement to decide property distribution
Cons of a Prenuptial Agreement
• It’s not an easy subject to talk about and otherwise is not romantic. If you fear that discussing the matter will create tension then it may not be a good way to go. Keep in mind that in Ohio, you must give sufficient notice before presenting a prenup. Thus, an agreement given just a day or two before the wedding may not hold up in court.
• A prenup cannot include child custody issues or child support. Ultimately, the court has the final say in calculating child support and it is determined by the ‘best interest of the child.’
• Child support is calculated using the Ohio child support worksheet. A prenup will not prevent you from having to pay child support.
• If your prenup is completely unfair or not in the interest of justice, a court may set aside some of your assets.
• Cannot include personal preferences such as chores, where to spend holidays, or what school the children should attend.

So, should you get a prenuptial agreement? Consider these questions:
1. Do you own real estate?
2. Do you have more than $50,000 in liquid assets?
3. Do you earn more than $100,000 a year?
4. Do you own any part of a business?
5. Does a part of your estate name beneficiaries or heirs other than your partner?
6. Do you work or your partner plan to go to school for an advanced degree, while the other works?
7. Do you have employment benefits such as stock options of profit sharing?
8. Do you have more than one year’s worth of retirement benefits?
If you answered yes to one or more of these questions, you should consider a prenuptial agreement. Consult with a qualified divorce attorney or prenuptial attorney for more information. Cleveland, Ohio attorney Daniel A. Baron can help with your prenup agreement today. Contact Baron Law LLC for a free consultation. Call today at 216-573-3723. You will speak directly with a Cleveland, Ohio divorce attorney who can assist you with your prenuptial legal needs.