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Divorce Estate Planning Steps

Important Post Divorce Planning Steps

Ending a marriage, whether though divorce or dissolution, isn’t a simple process. It’s not like flipping a switch, one day you’re married, another day you’re not. Whether a couple was together for a relatively short period of time or set down roots together for decades, spouses separating financially, physically, and emotionally is a labor-intensive journey. With all the paperwork and meeting with attorneys throughout the divorce, the last thing people want to do is sit down with an Ohio estate planning attorney and go over estate planning documents. Unfortunately, reviewing and updating estate planning documents is a non-negotiable part of martial separation. Regardless of whether you do anything or not, your estate planning documents will have a profound effect on you during some of the most critical, and vulnerable, moments of your life and in the lives of your family.

Apart from drafting a new last will and testament, powers of attorney, updating beneficiary designations, and considering trust use, what else should be updated post-separation? The following is a list of additional advice every experienced Cleveland domestic attorney would give their divorced or separated clients regarding their estate documents:

Review Your New Tax Reality

A big part of estate planning is minimizing taxes. Namely, estate, generation-skipping, and gift taxes. Since probate administration can easily eat up 5% to 8% of the value of a decedent’s estate, everyone is looking to save money. The good news, however, there are exemption limits. This is where the unified tax credit comes in. The unified tax credit is a certain amount of money and assets that can be given free of estate, generation-skipping, and gift taxes. Individuals get a set exemptible limit, but married couples can effectively utilize twice the amount than that of single individuals. Obviously, an estate plan formed on tax assumptions centered around accessible martial exemptions and deductions needs to be rethought post-divorce. The last thing you want is your surviving friends and family to deal with an out-of-date tax plan for your estate. The unified tax credit, however, is only the tip of the tax iceberg. Numerous federal, state, and local taxes work differently for married couples than they do for single individuals, make sure the middle of April isn’t full of nasty surprises because you assumed you’d still be taxed at a married rate.

Review Current Property Ownership

Often spouses are joint owners of property obtained during the lifetime of the marriage. Vehicles, boats, martial homes, and vacation residences all must be reviewed post-divorce to confirm who the listed owner or owners are.  What is said on paper matters in the legal world and a house owned jointly with a right of survivorship goes to the surviving owner, regardless of whether the divorce is finalized. Often in the whirlwind of divorce negotiations and arguments, simple things like updating a deed goes unnoticed. If there is a dispute, however, one of the first places a court and attorneys will look to determine who gets what is legal documentation. As such, make sure the ownership documents for your most significant assets reflect your life going forward.

Review and Update Guardianships 

If a spouse is nominated as a guardian for a minor or someone with special needs, divorce and martial separation does not revoke that appointment. If the time ever came when a guardianship is necessary, the existence of a pending or finalized divorce would be a factor a court would consider during an appointment hearing but it wouldn’t be determinative. Again, leaving it up to a court official to decide who cares for a child or someone with special needs is never preferable. That is why experienced Ohio divorce and estate planning attorneys will make sure you take a hard look at who will care for those who depend on you when you are no longer able. A simple designation in a basic estate planning document can make a whole lot of difference to your children and wards.

Review and Amend Existing Trusts

Given the utility of trusts, from tax savings, avoiding probate, ensuring eligibility for government programs, and plain old peace of mind, they are becoming more and more prevalent within families. Trusts, however, are only one piece of a comprehensive estate plan and when used within the context of a married family, are highly tailored to the issues, concerns, finances, and benefits of marriage. Thus, when divorce rears its ugly head any effected trust must be reevaluated for effectiveness and potential martial asset division. Often a pre-martial trust does not survive a divorce, too much regarding a trust was created on the assumption of marriage. As such, sit down and read your trust with your Ohio estate planning attorney and ask yourself if your trust is actually accomplishing what you want it to.

Disclaimer:

The information contained herein is general in nature, is provided for informational and educational purposes only, and should not be construed as legal or tax advice. The author nor Baron Law LLC cannot and does not guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable in a given situation may impact the applicability, accuracy, or completeness of the preceding information. Further, federal and state laws and regulations are complex and subject to change. Changes in such laws often have material impact on estate planning and tax forecasts. As such, the author and Baron Law LLC make no warranties regarding the herein information or any results arising from its use. Furthermore, the author and Baron Law LLC disclaim any liability arising out of your use of, or any financial position taken in reliance on, such information. As always consult an attorney regarding your specific legal or tax situation.

Helping You and Your Loved Ones Plan for the Future

Gray Divorce – Important Issues to Consider

Back in the day, societal pressure, economic dependence, or religious dogma often kept couples together. Before the 1950’s, divorce and separation weren’t even talked about in causal conversation, now 1 in 2 marriages end in some sort of post-marriage separation. Before the 1960’s, women weren’t in the workforce in the positions and numbers they are today. And with the corresponding purchase power of living wages, higher salaries, and stable careers, people are less and less dependent on another person to survive or live comfortably.  Further, organized religion is less impactful and abundant than it was in the past, many people are “religious” or “spiritual”, but pastors and priests are seeing their flocks grow smaller and smaller. Consequently, religious pressure to stay married regardless of personal happiness is no longer there.  All these factors, along with many others, has led to the recent increase of divorces in older American couples.

Logically, it makes sense. Less societal pressure plus long lengths of time can cause even the strongest relationships to break.  This is why the concept of “gray divorce” is becoming more prevalent. Divorce and dissolution are always messy and complicated affairs, but the unique considerations for older adults and long-lived relationships represent a beast of a different color. A senior couple going through divorce needs an experienced hand to guide them through the tempestuous waters of Ohio domestic courts, but before you make that call to a Cleveland area divorce attorney, it is smart to know what to expect.

What is Gray Divorce?

Gray divorce” a term of art that refers to divorce among people aged 50 and over. This term has risen in popularity because divorce rates for people aged 50 and over has doubled since 1990. Further, divorce rates for people aged 65 and over has almost tripled since 1990. What’s the cause of this historic increase in divorce rates?

One theory for the climbing rates of senior divorce is the link between the currently aging baby boomer population and increased comfortability with the concept of divorce. Right now, the baby boomer generation, those aged from 51 to 69, make up the bulk of Americans living in retirement. Most of these baby boomers grew up during the 50’s and 60’s, when the historic divorce boom first occurred. At this time, the now aging boomers were youths living in a period of unprecedented martial instability, personal freedom, and gender liberation. The concepts learned in youth are now resurfacing later in life. Divorce statistics, and also common sense, tend to reflect this.

Remarriages tend to be less stable than first marriages and also, contrary to Disney movies, love tends to fade, especially after long lengths of time often filled with hills and valleys of personal growth and development. These days, with everyone living longer and more comfortably, throwing in the proverbial towel just makes more sense for more people. Over half of gray divorces involve couples married 20 or more years. Further, the divorce rate for seniors 50 and older in second marriage is almost double the rate of those who have only been married once. Senior divorce rates are at an all-time high and will likely stay at increased levels for the foreseeable future.

So “gray divorce” is here to stay, at least for now, so what’s the big deal? Well, for starters, long lives with a corresponding close bond like marriage means by the time retirement comes around, couples considering divorce must deal with high net worth, expansive family structures and relationships, and assets which are often not amenable with quick or clean post-martial division. Issues that younger married couples often don’t have to deal with.

Issues Specific with Gray Divorce

The longer a marriage lasts, the more intertwined a couple’s lives become and messier the split will be. Soon to be ex-spouses may think they have everything planned out and that they know where all of the martial assets are located, however, this is seldom, if ever, the case. Long marriages don’t usually end quickly, usually things fall apart over time with many instances of discussion, compromise, and remedial efforts, like marriage counselling, are attempted. During this slow spiral, thoughts of broken hearts and a soon-to-be confused family take precedence and less thought to property division is given. Only when the time comes for court intervention does the laborious world of court procedure and property division get attention.

Certain things immediately come to mind during divorce, like bank accounts, the martial home, car, and retirements accounts. These, however, are only the tip of the iceberg. There are also many easily-overlooked or hidden assets which need to be located, identified, cataloged, and negotiated by the parties and representing attorneys. The following list highlights only some of the unique issues and assets surrounding gray divorce:

  • Prepaid Burial Plots – who gets them?
  • Timeshare property – who get it? What if no one wants it, how do you liquidate it?
  • Patents, copyrights, royalties  – who gets them? Are they even divisible?
  • “Hidden value” items – rare items of personal property or antiques
  • Pets – pets are family and there’s no such thing as pet visitation agreements, who will get Scruffy?
  • Family get-togethers – Thanksgiving and Christmas just got a lot more complicated.
  • Cash/Gold/Precious Metals or Gems – these assets tend to go unreported to the IRS and are often hidden by one spouse.
  • Redrafting of estate plan – each person needs a new estate plan, how will you pay for retirement or healthcare costs now? Who will be your executor?

This list only touches on the many issues and decisions surrounding later life divorce. Divorce at any stage of life is a difficult process but for those individuals separating after spending years laying down roots, difficulties are magnified, and an experienced divorce attorney is a must. If you are thinking about separating from a long term partner, or find yourself in the middle of a separation in which you are way over your head, call the experienced divorce specialists at Baron Law.

Helping You and Your Loved Ones Plan for the Future

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

Divorce Estate Planning Steps

Things to Consider When Getting Divorced

If you’re thinking about getting divorced, you are probably up against one of the most challenging times in your life.  Cleveland divorce attorney Dan Baron has the following to consider:

  1. Selecting an Attorney – Can you get divorced on your own? Sure.  But why go through it alone.  Moreover, the laws are constantly changing and trying to represent yourself in a divorce proceeding might mean the difference between living a happy life, or never seeing your children or home again.  I always tell my clients that although I can probably handle putting some electrical or plumbing into my home, its not worth the risk of flooding my home or burning it down from an electrical fire.  Thus, I hire a professional to do the job.
  2. Property – In Ohio, property through a divorce proceeding is divided up among the spouses.  Notwithstanding a prenuptial agreement, property that occurred ‘during the marriage’ is divided up.  This may include retirement accounts, bank accounts, real estate, cars, boats and more.  Thank with a Cleveland, Ohio divorce attorney to learn more
  3. Children – There are several things to consider with children.  First, the State of Ohio determines who pays child support, not your attorney.  Child support is calculated by entering information into Ohio’s child support worksheet.  The worksheet will delegate who and what is to be paid.

For more information, contact Dan Baron at Baron Law, LLC.  Baron Law is a Cleveland, Ohio divorce law firm representing individuals and businesses.  Contact Cleveland, Ohio divorce attorney Dan Baron today at 216-573-3723.

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.