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Careful estate planning may help people prevent inheritance disputes between their new spouses and their children from prior marriages upon their passing.

It is fairly common for people in Pennsylvania to remarry after a divorce, and often, one or both spouses may have children from a previous relationship. While these blended families offer people new opportunities to love and live, they can pose some challenging estate planning and inheritance issues. Therefore, having a carefully thought out estate plan that takes into account their new spouses’ needs, as well as those of their children’s, may help people prevent family disputes following their deaths.

Review beneficiary designations

The way people list their beneficiaries on retirement accounts, life insurance policies and other such accounts will affect how these benefits are disbursed upon their deaths. For example, it is common for people to update their beneficiary designations to their new spouses upon getting remarried. However, if they name only their new spouses, then they are able to specify their own new beneficiaries. This means that the original policy holders’ children may be bypassed altogether.

As such, people should make their intentions clear when designating their beneficiaries. They may name who the accounts should pass to after their spouses’ deaths or indicate specific percentages that each of their beneficiaries should receive.

Designate specific property separately

People often have family heirlooms or cherished personal property that they intend to pass on to certain children. Without a carefully designed plan, however, AARP points out that their new spouses may be entitled to claim up to half of the assets in people’s wills. Thus, it may be helpful if people leave a separate list of this property, sometimes referred to as a personal property memorandum. This list should describe each item to be gifted in detail and provide specific instructions as to who should receive each item upon their passing.

Consider inheritance timing

For couples who have not previously been married, inheritance timing is somewhat easy. People often leave their assets to their spouses, and their estates are passed on to their children after their spouses pass away. When it comes to second or subsequent marriages, however, withholding distributions of their children’s inheritances until after the death of their new spouses may create hostility and impatience. Therefore, people may consider establishing trusts or outright transfers that occur at the time of their deaths in order to accommodate the needs of both their surviving spouses and their children.

Working with an attorney

In the ideal situation, people in Pennsylvania could rely on their spouses and their children to work out inheritances to all their benefit after they pass away. However, even in long-term second marriages, new spouses and children from prior marriages may have drastically different ideas of what they are entitled to. As such, it will benefit people who have remarried or who are planning to get remarried to seek legal guidance. An attorney can explain their rights, including establishing wills and trusts, and help them set up a plan that provides for the needs of both their current spouses and their children from prior marriages.

While proper estate planning is essential, mistakes do happen. Below are the TOP FIVE some common mistakes:

1. Conflicts between legal documents
Many clients do not realize that some property does not transfer through the estate. For example, a deed supersedes the will. In other words, if the deed is titled as joint tenants with right of survivorship, then it bypasses the will upon your death. In other words, the will can leave it to one person, but the deed will override the will.

Similarly, accounts in joint names or with beneficiaries go to the survivors/beneficiaries, despite what the will says.

2. Not leaving enough in the residue (i.e. specific bequests are too high)
Some people want to give specific gifts or amounts of money to a designated person. The remainder (or residue) is then given to the other beneficiaries. The intent is that people are not forgotten, with the bulk of the estate going to the closest family members. Unfortunately, people do not realize that the residue is sometimes smaller than anticipated. There are several reasons for this – estate costs (probate fees, inheritance tax, attorney fees, creditors) are higher than anticipated, real estate sells for less, the stock market and retirements accounts are lower than when the will was prepared, or you spend more than you expected to during your lifetime.

For this reason, you want to revise your will every few years to make sure that the distribution is as planned.

3. Not checking with executors/trustees
When drafting a will, you will need to name an executor, and potentially a trustee and/or guardian. Because there is a lot of work that needs to be done, many people are reluctant to put in the time or energy. Furthermore, some people are reluctant to become the executor because they believe that it will cause issues with other family members. It is best to confirm with the potential executor that they are agreeable to take on this endeavor.

4. Not reviewing the will after life changing events
It is important to review the will every few years. Life changing events happen all of the time, so whenever you or a family member goes through divorce, gets married, has children, loses a loved one, or has a falling out with a family member, you need to make sure that the will reflects the changes. Additionally, you want to make sure that the named executor remains up to the task.

5. Moving to another state
There are different requirements for all states. If you are moving to another state, you should consult an attorney in the new state to make sure that your most recent will is still valid.

6. Ambiguity in terms
There are times when a will is ambiguous. This can happen when there are two family members with the same name (senior vs. junior or when someone with the same first name marries into the family and takes the other’s last name). It can also occur when you give a specific item (i.e. my favorite ring to my daughter), and no one knows for certain what item you are referring. Furthermore, if you are giving percentages of your estate to family members, you need to make sure that the estate adds up to 100%.

As you are unable to clarify this upon your passing, it is imperative that all terms of the will are clear when it is prepared. If there are any ambiguities, it is likely up to the court to determine your intent.

When you pass away, it is important to have a will in place so that your assets are distributed per your wishes. However, if you pass away without a valid will in place, your estate will be distributed pursuant to Pennsylvania intestacy rules.

If you are married at the time of your passing, the following rules apply:

  • If you do not have surviving parents or issue (i.e. children), your spouse will be entitled to your entire estate.
  • If you leave issue (all of whom are also issue of your spouse), then your spouse will get the first $30,000 and half of the remaining estate, and your children will split the other half of the estate.
  • If one or more of your issue are from a parent other than the surviving spouse, then your spouse will receive half and the issue will split to remaining half.Likewise, if you have no issue but your parents are alive, then your spouse will get half of the estate and your parents will get the other half.

If you do not leave a surviving spouse, then your estate is left in the following order:

  • Children
  • Parents
  • Siblings (or their issue)
  • Grandparents
  • Aunts and Uncles (or cousins)
  • Commonwealth of Pennsylvania

It is important to speak with an experienced attorney as the rules are very complex and often confusing.

Prenuptial agreements offer blended families a way of estate planning as well as protecting spouses in the event of a future divorce.

Anyone in Pennsylvania who has been prematurely widowed or divorced at least once knows that sometimes a marriage does not last as long as originally hoped or planned. Many people choose to get remarried and often question whether they need a prenuptial agreement for various reasons.

The American Academy of Matrimonial Lawyers noted in a 2016 survey that the prior three years had seen a jump in the number of prenups created.

Protection in the event of another divorce

The possibility of a divorce always exists and that can spell financial disaster for some. In addition to salvaging some assets, U.S. News and World Report notes that a prenup might even help protect one spouse from getting stuck with the other person’s debt.

Many people go into second or third marriages with children (or grandchildren) from previous relationships whom the parents or grandparents want to protect financially in case remarriage ends in divorce.

In divorce, separate property that belongs only to one spouse because he or she owned it prior to the marriage or received it as a gift or inheritance that continues to be held in that person’s name alone normally remains the property of that spouse, however, the increase in value becomes marital. This can be sheltered by a prenuptial agreement so that the increase in value can also be protected. Marital property, meaning assets accumulated during marriage by either spouse or by them jointly, is divided equitably or fairly in divorce unless a prenuptial agreement determines what assets are distributed and in what percentage. A prenuptial agreement also may be used to determine the level of spousal support or alimony or if there is a payment at all to the other spouse.

In a prenuptial agreement, the parent of a child from a prior relationship could negotiate that part of future marital property go to that child. For example, the parent might want to direct the marital part of his or her retirement accounts or part of the equity in other accounts or assets go to support or benefit the child, rather than becoming part of the marital property subject to division.

If the child has disabilities, the parent might want certain assets of the marriage to go into a special needs trust to protect the child’s future.

A prenuptial agreement entered into before the marriage can set forth the course of what will happen in a divorce and eliminate doubts on motives of the spouse.

Lifestyle provisions

Trying to include some lifestyle provisions might not be reasonable, such as how one spouse should wear their hair. Other matters may well be included in a marital contract. According to Time, use of social media is a topic often referenced in these documents nowadays to prevent one person from publicly humiliating or denigrating the other during or after a divorce.

A prenuptial agreement might also designate who will get the family’s pets if the couple divorces.

Estate planning assistance

Fidelity Investments explains that a prenuptial agreement can aid in a couple’s estate planning, especially when one or both spouses has children from prior marriages.

People may understandably want to take care of their spouses after they die. They also might want to make sure that their children or grandchildren from previous relationships receive certain assets or family heirlooms.

With no prenup directing assets to people outside the marriage, a spouse might automatically inherit certain assets when the other person dies even if there is a will in place as a spouse can elect to take against a will. The surviving spouse could live for quite some time longer in which case there may be little to nothing left of the estate to pass on to the deceased spouse’s children. The surviving spouse might also leave remaining assets to their biological children only and not the children of the spouse who died first. A prenuptial agreement can be used to waive that elective share and allow the will to control in the event of death.

Family businesses

Oftentimes there may be a family business that a spouse wishes to keep separate in the event of death or divorce. The spouse and his or her family may desire to keep the business intact and in the hands of family members or other owners or to avoid expensive and intrusive evaluations of their records. A prenuptial agreement can aid in easing the mind of other family members and creating a better family environment without the threats that may otherwise occur.

Otherwise, if the other spouse has an interest in the business in divorce or as an heir, the business might have to be sold or take on significant debt to pay the other spouse his or her share. In addition, if the business becomes embroiled in a court proceeding, the discovery process to determine its size, value and ownership can be expensive.

Legal assistance

Anyone contemplating remarriage should contact an experienced attorney prior to walking down the aisle for the second time. This will give him or her the insight of a professional to help make decisions about a prenuptial agreement. At a minimum, no potential spouse should sign a prenup before talking to a lawyer about its implications.

The family lawyers at Karen Ann Ulmer, P.C, represent people approaching remarriage in Eastern Pennsylvania and New Jersey, including providing advice about, reviewing, drafting and negotiating prenuptial agreements. The are available for consultations by phone prior to coming in to the office to determine if you would benefit from a prenuptial agreement.

Careful estate planning may help people prevent inheritance disputes between their new spouses and their children from prior marriages upon their passing.

It is fairly common for people in Pennsylvania to remarry after a divorce, and often, one or both spouses may have children from a previous relationship. While these blended families offer people new opportunities to love and live, they can pose some challenging estate planning and inheritance issues. Therefore, having a carefully thought out estate plan that takes into account their new spouses’ needs, as well as those of their children’s, may help people prevent family disputes following their deaths.

Review beneficiary designations

The way people list their beneficiaries on retirement accounts, life insurance policies and other such accounts will affect how these benefits are disbursed upon their deaths. For example, it is common for people to update their beneficiary designations to their new spouses upon getting remarried. However, if they name only their new spouses, then they are able to specify their own new beneficiaries. This means that the original policy holders’ children may be bypassed altogether.

As such, people should make their intentions clear when designating their beneficiaries. They may name who the accounts should pass to after their spouses’ deaths or indicate specific percentages that each of their beneficiaries should receive.

Designate specific property separately

People often have family heirlooms or cherished personal property that they intend to pass on to certain children. Without a carefully designed plan, however, AARP points out that their new spouses may be entitled to claim up to half of the assets in people’s wills. Thus, it may be helpful if people leave a separate list of this property, sometimes referred to as a personal property memorandum. This list should describe each item to be gifted in detail and provide specific instructions as to who should receive each item upon their passing.

Consider inheritance timing

For couples who have not previously been married, inheritance timing is somewhat easy. People often leave their assets to their spouses, and their estates are passed on to their children after their spouses pass away. When it comes to second or subsequent marriages, however, withholding distributions of their children’s inheritances until after the death of their new spouses may create hostility and impatience. Therefore, people may consider establishing trusts or outright transfers that occur at the time of their deaths in order to accommodate the needs of both their surviving spouses and their children.

Working with an attorney

In the ideal situation, people in Pennsylvania could rely on their spouses and their children to work out inheritances to all their benefit after they pass away. However, even in long-term second marriages, new spouses and children from prior marriages may have drastically different ideas of what they are entitled to. As such, it will benefit people who have remarried or who are planning to get remarried to seek legal guidance. An attorney can explain their rights, including establishing wills and trusts, and help them set up a plan that provides for the needs of both their current spouses and their children from prior marriages.

Pet owners who anticipate their pets outliving them should know the essential facts about pet trusts to be able to decide what is right for their situations.

Estate planning in Pennsylvania involves a lot of different considerations, including drafting a will, selecting an estate administrator, planning for the probate process and setting up any trusts. One kind of trust that people often overlook is a pet trust. A pet trust is a great way for pet owners to ensure that their animal companions will receive the optimal level of care necessary for them to have happy lives after their owners’ deaths. Knowing the answers to some common questions about pet trusts can help pet owners to decide if a pet trust is right for their estate plans.

What exactly is a pet trust?

A pet trust is a legal arrangement to ensure that a pet will receive the proper care and maintenance it needs after its owner passes away. While typically used for animals with longer lifespans such as parrots and horses, a pet trust can be set up for any animal and will last for the duration of the animal’s lifetime. When it is set up, a designated caregiver is set up as a “trustee” who will be given a set amount of funds that is determined by the grantor of the trust, based on what the pet’s needs are anticipated to be. This may be done in whatever manner the grantor specifies in the trust, but it is usually done as a disbursing of funds at regular intervals.

How is a pet trust different from putting a pet in a will?

There are limitations to what can be put in a will, and when someone inherits money from a will, he or she is not necessarily going to be monitored as far as what he or she spends the money on. A pet trust instills in the trustee a legal obligation to utilize the designated funds exclusively for the care of the specified pet. A pet owner can also specify the expected standard of care for the pet to receive for the remainder of its life. Another benefit to a pet trust is the option to designate a remainder beneficiary. In the event that the pet passes on before all of the funds of the pet trust are exhausted, this beneficiary will receive anything that is left over in the trust.

The decision as to whether or not to go with a pet trust can be a complex matter. There are many details to be worked out, especially if there are multiple pets involved. It may be prudent for someone who is considering this option to discuss the matter with an attorney in the local area who practices estate planning law.

Wills for Heroes is a program in conjunction with the Pennsylvania Bar Association that provides free wills, living wills, and powers of attorney to first responders and their families. Appointments are required along with proof of military or public service. There is also a limit on the size of the estate to utilize this service. Appointments can be made online at the Pennsylvania Bar Association website. Each appointment slot is one hour. Each participant will have their final, notarized documents to take home with them by the conclusion of their appointment. If a spouse or significant other is also participating, their appointment will be immediately following that of the first responder. The program is made possible through the time of volunteers including attorneys, reviewers and witnesses.

Lehigh County has a “Wills for Heroes” event coming up on Saturday, August 18 2018. The event is being held at the Barrister Club. Their address is 1114 W Walnut Street, Allentown, PA 18102. Appointments begin at 11 a.m. For more information and events at other locations throughout the state, you can visit www.pabar.org/wfh/. Other upcoming dates include September 8, 2018 for York County and September 12, 2018 for Philadelphia. Our firm is also able to assist with estate planning documents at a reasonable cost including trusts, wills, living wills and powers of attorney. Please contact our office if you would like additional information or to set up an appointment.

A trust is a mechanism wherein assets are set aside for certain beneficiaries and managed by a trustee subject to the terms of the document. Irrevocable trusts cannot subsequently be modified or terminated. Irrevocable trusts can help protect assets for parties who may need long-term care. Elderly persons needing long-term care often try to utilize Medicaid to assist with the expenses. Medicaid is a need-based health care program so there are limits on the amount of income and assets a party can have when seeking eligibility. An individual should plan ahead to make sure any countable assets and income are structured so as not to affect any future applications for Medicaid. Medicaid can look back five years from the date of an application so it is important to do any relevant estate planning well in advance.

An irrevocable trust must be established prior to the five-year look-back period to avoid any penalty. Additionally, the beneficiaries of the trust cannot be the party needing care or their spouse. The children can be named as beneficiaries with the hope that they would utilize the assets to assist their parents as needed. This does come with some risk as the trust cannot specifically limit the children in this manner so the children would need to be trustworthy. It can also be problematic if the party is subsequently released from care and now needs to support themselves again. You should consult with an experienced estate planning attorney regarding the best options for your circumstances.

The process of getting divorced can be hard to move through.  When you are finally divorced you will probably want a break from making decisions and taking care of legal matters.  However, it is crucial to immediately update a few important areas of your life including your will, life insurance beneficiaries, and other estate planning documents.  

Your divorce agreement may include some estate planning language as it pertains to your children, including how life insurance beneficiaries must be maintained.  It is critical to not only follow these agreements, but to ensure that the other pieces of your estate are changed so your ex-spouse is removed and can no longer control your life or handle any of your affairs should something happen to you.  

Your Will

If your last will includes your former spouse, then you will need to update that information so your final arrangements, distribution of personal items, and your financial matters are handled according to your wishes.  Remove your former spouse as your executor and ensure that they are no longer the recipient of any of your personal property.  Additionally, should anything happen to you or your ex-spouse, you should name a guardian for your children.  

Beneficiaries on Financial Accounts


Beneficiaries on your life insurance policies as well as investment and bank accounts need to be changed according to the policies and procedures established by each institution.  Clearly stating your wishes in your will that you want your children to inherit your money is not enough.  Each company is going to have a different form that needs to be correctly filled out to properly change your beneficiaries.  If it is not done correctly the previous beneficiary stands, and your ex-spouse may wind up with a significant amount of money.  Click here to read more about changing your life insurance policies.

Other Estate Planning Docs

 

Power of Attorney documents should be updated.  In the event that you are rendered incapacitated, you want a trusted relative or friend to have the authority to make decisions for you.  This includes matters related to your health as well as your financial matters.  

When we work with clients we always work through these issues to ensure that your best interests are protected through your divorce and into your new adult life.  Taking the time to ensure your will is properly updated after your divorce will give you peace of mind as you will know your final wishes are clearly stated.  

Additional Resources: https://www.reviews.com/life-insurance/

Bucks County has a “Wills for Heroes” event this upcoming Saturday, May 14, 2016. This is a program in conjunction with the Pennsylvania Bar Association that provides free wills, living wills, and powers of attorney to first responders and their spouses/significant others. Proof of military or public service affiliation is required. Appointments are required and can be made on the Pennsylvania Bar Association website. Each appointment is for one hour. At the conclusion of the appointment, each participant will have their final, notarized documents to take home with them. If a spouse or significant other is also participating, their appointment will be immediately following that of the first responder. The program is made possible through the time of volunteers including attorneys, reviewers and witnesses.

This week’s “Wills for Heroes” event is being held at Bucks County Community College, Lower Bucks Campus, 1304 Veterans Highway, Bristol, PA 19007. The event starts at 11 a.m. For more information, you can visit www.pabar.org/wfh/. Our firm is also able to assist with estate planning documents at a reasonable cost including wills, living wills and powers of attorney. Please contact our office if you would like additional information or to set up an appointment.

Click here to read more about estate planning.