Category Archives: Divorce

Do We Need a Trust?

Trusts come in different shapes and sizes, and some will work for you and some will not.  A good estate planning attorney, or perhaps your banker or financial planner, will need to know quite a bit about your individual situation before being able to recommend a trust. 

Trusts can be invaluable for asset management purposes.  Suppose for example, that your 25 year old son is not good with money right now. An inheritance held in trust and managed by a family friend or a professional trustee can help him manage his funds so that he has a nest egg for his first home or a bit tucked away to help him through a layoff later in life.  Or perhaps you are concerned that an adult child’s marriage is  rocky, and want to see that your money goes to your children and grandchildren, not to the soon-to-be-former spouse.  A correctly drafted trust can help with that.

It also is a good tool for incapacity planning.   If you create a trust and put assets into it, your trustee can see that the assets are managed if you ever become incapacitated.

Assets held in trust also avoid probate.  Because a trust is an entity, not an individual, when the person who funded the trust dies, the trust can continue to operate according to its terms.  This can provide privacy (probate filings are public), and continuing access to trust assets by the beneficiaries or the  remaining spouse.

Irrevocable trusts (ones that can’t be changed or revoked) can be used for estate tax planning, to hold life insurance policies, for Medicaid planning, or for other types of asset protection. 

When you think about doing a trust, think about your goals, who would be a good trustee, and find someone who is knowledgeable about tax law and estate planning to help you with the process.  Think about what assets should go into the trust, and how the beneficiaries are likely benefit (or not) by having assets held in trust.  Not every situation is right for trust planning; sometimes the simple approach is the best one.  Estate planning, whether trust based or will based, should be carefully tailored to reflect your situation, because each family, each inheritance, and each set of goals are a little bit different.

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Estate planning and divorce

I know that neither of these topics is particularly cheery, but in some cases they do go hand in hand.  If your marriage is going downhill, and you anticipate a divorce, or are in the process of getting divorced, it makes sense to take two immediate steps:

Name someone other than your spouse as your healthcare proxy; and

Revoke any durable power of attorney that allows your spouse to sign papers on your behalf, and designate a new power of attorney to act for you if you are incapacitated.

These two steps should be taken right away.  As long as you are still legally married, these documents generally continue to be in effect, and as you probably know, a divorce can take a long time to finalize.

Comprehensive estate planning is important, but it is unrealistic to think that most couples can deal with it while going through a separation or divorce.  Estate planning can wait a bit, but these other steps cannot wait.  My office is happy to assist you with this, and credit the amount towards an estate plan, or if you are working with a family law attorney, he or she should be able to assist you with a new health care proxy and power of attorney.

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I’ve GOT a will…

But I made it two spouses, three children, and two businesses ago.  When your life changes, your estate plan should ideally keep up with those changes.  You do not need to revise a will every time something changes in your life –many documents are drafted to take some changes into account.  However, as part of your financial planning, you should revisit your estate plan every 3-5 years, and definitely in the case of a divorce or marriage

Divorce:  In some states marriage or divorce nullifies a will, health care proxy or power of attorney.  In other cases it may not.  If you and your spouse are on good terms and you want him or her to make the decisions about your medical care, it is best to revise your health care proxy to make it clear that this is your desire.  Similarly, you may not want your soon to be former spouse to have the ability to write checks from your bank account, but even if divorce nullifies a power of attorney, simply being in the process of divorcing will not.  Revoke or change your health care proxy, will, and power of attorney if you realize that your spouse is no longer a trusted partner and you are heading your separate ways.

Wills, trusts, health care proxies and powers of attorney are powerful documents; take a look at them from time to time and be sure they are still relevant to your life.

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Dennis Hopper – words really do matter

It was reported in the New York Post that the discord over Dennis Hopper’s estate plan has already begun.  The crux of the matter is that Mr. Hopper did not want his wife to inherit from him if they were divorced or no longer living together.  Now, that seems reasonable, and in fact, a will is often drafted in a way that a divorce (or legal separation) will disinherit the former spouse.  However, Ms. Duffy (wife) was living on the property, but in a separate house.  So, is this “living together” or not?  Lawyers get a bad name for dragging out seemingly clear things, for being verbose, floundering in legal-ese, and generally seeming to obfuscate the obvious.  However, language defining what we think we already know can sometimes avoid confusion (and hefty legal fees).  When you are reviewing or working on any legal document, it pays to think about the “what ifs” during the drafting stage, and not at the litigation stage.  If your attorney asks you seemingly endless questions (“What if the guardians get divorced –who should care for your children”; “What if Jim isn’t avaliable?”; “What if everyone you’ve named dies before you do?”), be patient, think the questions through, and realize that your attorney really does have your best interest at heart, and is not just deliberately annoying you…

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Divorce De-Mystified – Free Seminar

April 29, 2010 7:00-8:30 pm at the Beverly Farms Public Library.

Join us for a conversation on how to prepare for divorce from legal, financial and emotional perspectives.  Family law attorney Kate Barnes will address issues to consider before a divorce, how the process works, and legal standards in child custody, support, and alimony.  Psychotherapist Leah Alexander will talk about the emotional realities of divorce, while I’ll go through some of the financial questions and estate planning changes that a divorcing person might consider.

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