THE WEDDING BELLS ARE RINGING!

The wedding bells are ringing!

It is spring and many of you are tying the knot this spring or summer. It is a very exciting and unique time in your life when you are preparing to share your entire self with someone else.

Even though we are super excited for you, we wanted to get a word of wisdom out into the world of young lovers. We advise that you keep property lines not as blurred as love lines. It makes sense to sit down with your significant other and plan out your estates and their division in case of (i) death, (ii) inheritance (iii) and … divorce or separation.

We can help with this quick 5 point outline for your planning discussion and if you need a more in-depth advice, please call us for a consultation.

1. Talk about long term commitment to this marriage.

If you live together your entire lives and have children, how do you want your estate to be distributed when the first one of you dies. What will your children get and how? Who will be guardians for your minor children? Who will be your executors and trustees? Will you create trusts for each other? What if the surviving spouse gets remarried and has children in the second marriage? What about your primary (marital) residence? What about college funds for the children?

2. Talk about businesses.

You and/or your partner may be business owners. Plan for that business. If you have other partners in that business, they will be less than thrilled to know that, if you are gone, it is your spouse that they will have to deal with. Plan for it! Let us draft partnership agreements, create holding companies and business succession trusts for the purposes of transitioning your business to your heirs in a smooth and painless way.

3. Talk about minimum spousal protections in New York.

No matter how touchy this subject gets, discuss it. Your surviving spouse is entitled to receive 1/3 of your estate at your death under the law of the State of New York. There is a complex formula as to how that 1/3 share – called spousal elective share – is determined. A disinherited spouse in New York (i.e. a spouse that was left less than their statutory share under the estate of the first-to-die-spouse) can claim his or her share by contesting the testamentary plan in court. We can help figure out the best way to approach your planning to minimize the risk of this costly process and to avoid the family feud.

4. Talk about default distribution of property in divorce.
New York is an equitable distribution state. This means that if you are going through a divorce and you can’t reach an agreement with your spouse regarding your property, the court will divide it in a way that seems fair – BUT not necessarily 50-50. Only marital property is divided between spouses in a divorce. Marital property is anything you and your spouse acquire after the date of your wedding, regardless of how the property is titled. Some property is exempt from the formula, inheritances, even if you receive it after getting married. Unless you take some action to change the separate property nature of your inheritance, it stays yours through your divorce proceeding and after. Certain actions can change your separate property into marital property. Commingling and transmutation are most common problems with inheritance received after marriage. Let us help structure your inheritance in such a way as to help address comingling problem and keep your property separate throughout your marriage.

5. Talk about life insurance.
If you hold significant family assets which you want to pass down to your children and bypass your spouse, it makes sense to look to other ways to ensure that your spouse is taken care of on your death. Life insurance policies purchased or paid for during the marriage are marital property and subject to equitable division by the court. It may make sense to place such policy into a trust for the benefit of your spouse which would be protected from the spouse’s creditors and may also be excluded from your estate for estate tax purposes. Such policies offer excellent source of liquidity to your spouse as well as takes care of them in case your illiquid business interests pass to your children. Beware of tax consequences, of course, every time you do planning because assets passing to your children may be subject to estate taxes while assets passing in trust to your surviving spouse may qualify for the marital deduction.

After you’ve had a chance to talk to your significant other about all the issues above, you are ready to call us to implement your help by means of a prenuptial agreement, trusts, waivers and Wills. We will be happy to assist you in planning your future together. Cheers!

Request your Free Consultation or Call 212.596.7039 Today!

 

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