Van Dyck Law

Don’t Let Money Stress You Out of Your Relationship!

“Statistics show that finances are the leading cause of stress in a relationship, and more than 35 percent of the population name money as the primary trouble area with a partner.”

My Primetime News published a story last week, “Hearing Wedding Bells? Be Sure Finances are Included in Your Planning,” by Gerald Rome, Colorado Securities Commissioner.

Rome notes that summer is wedding season. Whether you’re taking the plunge later in life—maybe for the second time or advising a young couple about to make the ultimate commitment—much of the thought process is the same. There’s perhaps no topic less uncomfortable, but more important, than finances.

Before you or a loved one say, “I do,” be sure to consider the following:

Transparency. Many divorces stem from a lack of honesty about finances. Before you walk down the aisle, be sure you know everything about your betrothed’s financial past, spending habits, investing philosophy, and goals for the future. That means sharing information on major debts from education, business, and home loans, as well as credit scores and bankruptcy history. If you’re entering a second marriage, be truthful about any alimony being paid to or received from a former spouse.

For those marrying later in life, think about how or whether to merge accumulated assets and how to compromise on handling financial affairs, after what may have been many years of individual decision-making.

Financial Roles. For co-mingled finances, it’s important to be certain that you’re clear on who will handle what. Many financial issues that arise later in life, are due to one spouse not knowing what’s going on and being deluged with a mountain of new information and decision-making, in the event of a spouse’s sudden illness or death.

Prenuptial Agreement. Detailing what will happen to assets, if the marriage fails, isn’t about a lack of trust—it’s about being prepared.

Estate Planning. Organize your property to ensure that no matter what happens, your family’s financial needs will be met. This includes drafting powers of attorney, creating or revising your wills, purchasing life insurance policies, revisiting retirement accounts and investment funds, establishing trusts and naming beneficiaries and considering any tax implications.

An honest and sometimes difficult financial conversation isn’t something to which we look forward. However, couples who avoid this, because they’re love-struck and blind to what the future may hold, will regret it later. Work with an experienced estate planning attorney and plan now.

Reference: My Primetime News (May 2, 2018) “Hearing Wedding Bells? Be Sure Finances are Included in Your Planning”

 

When to Update Your Estate Plan? How About Right Now?

“Have you wondered when is the right time to update your estate plan?”

If any of the following five items have happened in your life, you need to reevaluate your estate planning documents: birth, death, marriage, divorce or a big change in your financial status.

The FDL Reporter recently published an article, “Best reasons to update estate plans include marriage, divorce, move, birth.” It discusses these life events and how they can impact your estate planning.

Marital Status. A change in your marital status definitely requires significant changes to your estate plan. If you've recently married, state law on marital property will now apply to the division and distribution of your estate upon your death. If you've recently divorced, your estate plan should be updated to see that your ex is removed as a beneficiary and fiduciary, as well as any of his or her relatives.

Financial Status. If you're fortunate enough to have won the lottery or received an inheritance, you need to look at your existing estate plan to see that it still satisfies the needs of your now larger estate. If the opposite has occurred and your estate has declined in value, you also need an estate plan review.

Birth or Death of a Beneficiary or Fiduciary. You need to remove the individual's name.  However, if a spouse has died, your plan may need a complete overhaul. If you or a beneficiary have adopted or had a child, you need to add that child.

A Move to a New State. This is one of the most overlooked reasons to update your estate plan. Every state has different probate, tax, and estate laws.

Time Passes. If your beneficiaries were younger when you created your plan, consider their status as they get older. They may now even be ready to take on the fiduciary roles in your estate plan, like power of attorney for finances and health care, or even as the Personal Representative of your Will. Your estate planning documents should reflect the changes brought by the passage of time.

Reference: FDL Reporter (April 24, 2018) “Best reasons to update estate plans include marriage, divorce, move, birth”

 

Financial Reminders Before Remarriage

 “Getting remarried gives people a fresh start, an opportunity to learn from the past and to move forward. Unfortunately, for most couples, the next trip down the aisle can also come with a host of new financial challenges.”

Nasdaq’s recent article, “Getting Remarried? 5 Financial Steps to Take Before Tying the Knot (Again)” provides some financial steps to consider before getting remarried.

Create a consolidated net worth statement. One fundamental mistake many couples make is failing to look at their combined net worth, until they start talking about how they will pay for their wedding or another big-ticket item. Those who remarry frequently have more complex financial responsibilities, such as child support, liquid and illiquid investment assets, as well as estate planning and tax-planning strategies. The best course is to be upfront from the start to avoid damaging your relationship in the long run. Take time to review your individual financial situations, including liabilities, before you create a consolidated statement of net worth.

Sign a pre or postnuptial agreement. This can be uncomfortable but can be valuable for both parties, if there’s a divorce. A pre or postnuptial agreement is particularly important, since it's the only way to legally claim specific assets within a marriage. In addition, a prenuptial agreement may ensure that any children within the marriage are financially protected, in the event one spouse dies. It’s also important to remember, even if you're recently married and don't have a formal prenuptial agreement, state law will often have one for you.

Think about all of your kids. Some spouses who were married previously may bring children into their new relationship. This creates many financial issues. Determine as a couple how you’ll financially address major expenses, like health care, child care, and tuition. When you've decided, discuss your plan of action with an attorney to be sure you're considering all potential options and their long-term implications.

Update your beneficiary designations. This is a common error. Assuming you want to name your new spouse as a beneficiary, you should review all your accounts and update the documents.

Update your estate plan. Estate plans can be forgotten with all of the details of a wedding. Talk with an experienced estate planning attorney to review your situation and update or create wills, powers of attorney, and health care directives to be certain that your new spouse, or another trusted person, has the decision-making authority that reflects your wishes.

Reference: Nasdaq (April 20, 2018) “Getting Remarried? 5 Financial Steps to Take Before Tying the Knot (Again)”

 

Lady Who Killed Husband Can’t Get His Pension, Court Says

“A woman who stabbed her husband while he slept but was later found not guilty by reason of insanity, isn’t entitled to receive surviving spouse pension benefits.”

A woman judged insane at the time she stabbed her husband is not entitled to pension benefits as his surviving spouse, the U.S. Court of Appeals for the Seventh Circuit recently held in Laborers’ Pension Fund v. Miscevic.

Bloomberg recently published an article, “Woman Who Stabbed Husband While He Slept Can’t Get His Pension.” The article noted that the Employee Retirement Income Security Act (ERISA) generally would require the pension plan to pay the benefits to the woman, because she was the surviving spouse.

However, Illinois has a “slayer statute” that bans a person from financially benefiting from the murder of another.

The federal court of appeals ruled that ERISA doesn’t preempt Illinois’ slayer statute. The Seventh Circuit agreed with the courts that have held that ERISA doesn’t preempt state slayer laws in North Dakota, New York, and Nevada. Most states have adopted these statutes, but the U.S. Supreme Court has chosen not to address the issue at least twice.

The Seventh Circuit noted that the notion that an individual who kills a plan participant can’t recover plan benefits, “is a well-established legal principle which predates ERISA.”

The Seventh Circuit also rejected the woman’s argument that the Illinois state law didn’t apply to her because she was found not guilty by reason of insanity.  However, based on a decision by an Illinois appeals court, the judges held that the Illinois slayer law does apply to bar recovery by individuals who commit a killing but are found not guilty of murder by reason of insanity.

What exactly did the woman do? She intentionally stabbed her husband in his sleep, then she intentionally hit him with a bat to keep him from calling the police, the judges said.

Although she was not able to understand the criminality of her conduct, she intended her actions, the Court of Appeals said.

Judge Joel M. Flaum issued the opinion, which was joined by Judges Michael S. Kanne, and Ilana Diamond Rovner.

Reference: Bloomberg (January 29, 2018) “Woman Who Stabbed Husband While He Slept Can’t Get His Pension”

Suggested Key Terms: Estate Planning, ERISA, Pension, Probate Court, Beneficiary Designations

Understand the Complexities of Remarrying Later in Life

“Remarrying later in life can create several complex financial, legal, and emotional matters that should be addressed.”

About a third of U.S. residents ages 15 and older have been married at least twice, according to the U.S. Census Bureau, and remarriage among Americans ages 55 and older is increasing. At the same time, younger people are becoming less likely to have remarried.

The Flagstaff (AZ) Business News recently published an article, “Financial Issues to Consider in Remarriages,” which suggests that you should be candid about your financial situation. Couples who are marrying for the second (or third) time frequently have financial baggage. You should eliminate issues later in the marriage by having open and honest discussions about assets, debts and obligations. Think about the following questions to get the talks started:

• What financial obligations are we bringing to our marriage?
• How are our credit scores?
• Do we have financial obligations (alimony, child support) to our ex-spouse(s)?
• Do we want to pool our finances?
• Where will we live?
• How will our marriage impact college financial aid for our children from previous marriages or relationships?

It is also important to update life insurance, medical directives and beneficiary designations. If you don’t do this and you (or your spouse) die, part of your estate could go to a previous spouse. If you and your spouse have living wills, health care powers of attorney or healthcare directives, review them with your estate planning attorney to ensure that these documents reflect your current wishes.

You should also consider how remarriage affects your retirement planning, like the benefits your partner may be receiving. These can include a deceased spouse’s social security benefits or pension payments.

Discuss estate planning with your attorney because subsequent marriages can impact estate plans—a common concern among older couples. An older couple is more likely than younger newlyweds to bring property and other valuables into the relationship. They often may want these family valuables to go to their own children from a prior marriage.

Beginning again with a new partner is exciting, even when the new marriage introduces complex financial considerations. Talking to each other, as always, is the key to long-term success.

Reference: Flagstaff (AZ) Business News (October 26, 2017) “Financial Issues to Consider in Remarriages”