Blog
Strong Trust Planning is Important When One Spouse is Not a U.S. Citizen
As reported in Trust Advisor’s recent article, “Foreign Spouses Need Strong Trust Planning,” there has been a huge boost of individuals who are not U.S. citizens, but who establish residence here. They’re known as “resident aliens” under U.S. tax law. There are also non-resident, non-U.S. citizens (“non-resident aliens”) who will invest in real and personal property situated in the state. This can include a wide variety of real and personal property, from vacation homes to ownership interests in a holding or operating company.
This uptick in foreign business and personal investment means more attention to the complex federal tax requirements applicable to non-U.S. citizens for income and transfer tax purposes. In addition, there are tax issues that impact non-U.S. citizens in connection with transfers of money or property during their lifetime or at death.
Read MoreWorried About Your Children’s Marital Choices? Protect Their Inheritance with Trusts.
Trusts as a means of avoiding paying estate taxes are not as necessary as they once were. However, they have a number of other functions that have become attractive to concerned parents. When children marry and then divorce, a trust may protect an inheritance from a divorce settlement. A recent Kiplinger’s article, “A Trust Can Protect Your Adult Child’s Assets from a Failed Marriage, takes a look at how this works.
It’s not uncommon for a child to get an inheritance and combine it with assets he or she owns jointly with their spouse, like a bank account, car or house. Depending on the state in which they reside, the inheritance may become marital property subject to division in the event of a divorce. If the child’s inheritance stays in a trust account, the inherited wealth may be shielded from a divorce.
Read MoreMid-Life Marriages, Money and Myths
There are, admittedly, challenges when people decide to get married after fifty. There are also many myths, as reported by Forbes in “6 Money Myths About Marrying After 50.” If you or your intended has children from a prior marriage, there are added complications that need to be addressed.
Myth #1: Pre-nups are just for the rich or famous. If you’ve been married before and have children from a previous relationship, a prenuptial agreement is important to ensure your assets will pass to your children from the prior marriage. What about a first-time marriage? There still might be a need for a pre-nup, especially if you own significant assets. Don’t think of a pre-nup as preparing for divorce, but rather more like creating your estate plan. If you don’t have your affairs in order, the state will decide for you—just like dying without an estate plan.
After age 50, the focus of a pre-nup should be on protecting your children and grandchildren. For instance, some states—like Massachusetts—allow a surviving spouse to claim his or her “elective share,” instead of what’s detailed in the decedent’s estate plan. A pre-nup allows your spouse to waive the elective share, meaning odds are your estate plan won’t be challenged by your surviving spouse.
Read MoreSenior Weddings Call for a Different Kind of Planning
Just as your life was probably simpler the first time you married, your subsequent marriage, especially if it occurs later in life, can become problematic if good planning doesn’t happen in advance. If you don’t know your legal rights or your responsibilities, reports New Hampshire Magazinein “Navigating Late-Life Remarriage,” you, your children and your new spouse may be in for some unpleasant surprises.
While death and the likelihood that one spouse will outlive the other is inevitable, another important factor is that the divorce rate among those who remarry later in life is 60%. This is much higher than the rate of any other segment of the population and some experts think that number may go even higher.
Read MoreEstate Planning Considerations for Blended Families
Estate planning for blended families can become complicated, but neglecting to plan in advance can lead to unhappy outcomes for the entire family. The Fairfield Bay News in “Estate Planning Tips for Blended Families”advises speaking with a qualified estate planning attorney, preferably one who has worked with blended families and understands the challenges that can arise.
Here are a few general ideas to help you think about planning for your blended family:
Update Beneficiary Designations. Get all of your beneficiaries set and updated, such as those on your retirement accounts and insurance policies. This will ensure they reflect your blended family as well as your estate plan. It’s important to remember that these designations take priority over any instructions in your estate plan, such as in your will or a trust—it’s a totally separate deal.
Read More