Solidly Single
If you are single, you are in good company. Nearly half of all adult
Americans are single.* Being single can mean considerable personal and
economic freedom. Nevertheless, just like your married counterparts,
proper estate planning is necessary to keep you in control.
Incapacity
& The Law
Every adult
American is responsible for making his or her own personal, health care
and financial decisions. In fact, you may take many basic decisions for
granted. For example, you decide where to live, what medical care is
appropriate and how to manage your finances. But what if an illness or
injury leaves you unable to make even these basic decisions? Who will
make such decisions for you? Who will have your best interests at heart?
Proper estate planning is required in advance
of your incapacity, if you want to appoint your own decision-maker.
Otherwise, by default you may find yourself in the Probate Court in a
legal process that typically employs three lawyers and makes your
private personal, health care and financial circumstances a matter of
public record. Given the option, most singles would prefer to avoid this
Lawyer Full Employment Program.
Minor
Children
Do you have minor
children (e.g. under age 18 in most states)? If so, you probably invest
considerable time and money to provide them with a moral, safe and
secure home environment. What if you died while they were still minors?
Who would rear them to adulthood? Who would provide the moral, safe and
secure home environment? Unless you want a Probate Judge to make the
selection for you, proper estate planning is required.
Who will manage the inheritance you leave for
your minor children until they reach adulthood? Again, that decision
will be made by a Probate Judge in the absence of proper estate planning
by you. What if you are divorced? Absent a showing of unfitness, the
surviving biological parent will not only rear the children to
adulthood, the Probate Court also will appoint them to manage the
inheritance. Even worse, if the surviving biological parent then
survives your children, they ultimately may receive the
inheritance…along with their new spouse and stepchildren!
Your Valuables
Is family harmony
important to you? Whether it is grandma's yellow pie pan, antique furniture or that Civil War
sword, such items should be identified in your estate plan along with
the designated recipient of your own selection. Otherwise, your
valuables could end up in the hands of the wrong loved one or sold to a
perfect stranger in your Estate Sale. Either way, relationships between
and among your loved ones could be bruised or battered unnecessarily.
Death,
Taxes & Trusts
Benjamin Franklin
noted that there are only two certainties in life: Death
& Taxes. While there is little we can do to avoid the former,
proper estate tax planning can minimize the latter. One of the best kept
secrets for reducing Federal Estate Taxes is a lifetime gifting strategy
using the Annual Gift Exclusion (AGE).
Under the AGE, each taxpayer may give $11,000
each year to as many people as they wish. This wealth transfer does not
trigger gift taxes to the donor or to the donee. Additionally, any
future increase in the value of the gifted asset is not included in the
donor's estate when determining Federal Estate Taxes later on. For
this reason, gifts of appreciated assets (e.g. stock that is rapidly
going up in value) are popular. [Note: Appropriate legal counsel should
be sought before making AGE gifts because of important capital gains
considerations.]
Are your likely beneficiaries young, inexperienced or irresponsible? If
so, various Trusts can be created to protect your AGE gifts from their
potential divorces, lawsuits, bankruptcies and good, old-fashioned
squandering. Through carefully drafted Trusts you can control how and
when the gifted assets are made available to your beneficiaries. As
famous jurist Oliver Wendell Holmes put it: Put
not your trust in money, but put your money in trust.
Summary
This has been a brief overview of
a rather complex topic. As always, qualified legal counsel should be
sought to determine the appropriate strategy for your unique
circumstances and objectives.
*
U.S. Census 2000
Pre-Marital
Priorities
Are
you or someone you know planning to get married? If so, you should
consider some of the important financial and legal consequences of
exchanging vows before the big day. Let's review a few of the many
considerations.
Premarital
Agreements
Whether you are single, widowed or divorced, you might want to
consider executing a Premarital Agreement with your intended before you
say I do. Legally speaking, a Premarital Agreement is a two-party
contract made in contemplation of marriage and is effective upon
solemnization of the marriage. Practically speaking, it allows
prospective spouses to lay their financial cards on the table and agree
in advance to such things as:
- Asset
ownership during the marriage;
- Asset
disposition upon death;
- Asset
division upon divorce; and
- Spousal
support.
To
help ensure that your Premarital Agreement withstands future legal
challenges to its terms, be sure to dot the i's and cross the t's.
Here are some points to remember:
- Provide
full, written disclosure of all assets by both parties;
- Provide
adequate time for negotiation and reflection (e.g. well in advance of
the wedding day);
- Make
sure the Agreement is entered into voluntarily and the provisions are
not unconscionable (e.g. unfair);
- Make
sure each party understands the provisions; and
- Make
sure each party has independent legal representation.
While
perhaps not very romantic, a properly drafted Premarital Agreement can
protect family wealth and the interests of other family members in such
wealth (e.g. family business ownership). In some circumstances, it also
can help determine whether money is a primary motivating factor in the
relationship before it is too late. Love may be blind, but you should
approach marriage with both eyes wide open.
Yours,
Mine & Ours
Today, more American families are Blended
Families, than traditional Nuclear Families. If your marriage would
create a Blended Family, then careful estate planning is required to
reach often-competing goals. For example, how will you provide for the
financial needs of your surviving spouse during their lifetime and for
your own children?
Careful coordination between your financial planning and your estate
plan is required to provide for your surviving spouse and your own
children. One possible strategy could be called the Triple
Play. Here's how it works: First, you and your spouse-to-be
execute a Premarital Agreement identifying and separating your
respective assets. This will allow each of you to retain control over
their eventual post-mortem disposition. Second, you create a QTIP
Trust as part of your estate plan. Upon your death, this Trust will
provide at least the net income from the assets it holds for your
surviving spouse. Upon their death, the assets are then held and
administered for your own children. Finally, a Life Insurance policy on
your life can provide the funds needed to fuel the QTIP Trust and/or
Trusts for your own children upon your death. Why Life Insurance?
Because it provides a known sum of cash when it is needed at an unknown
time in the future.
Summary
Be sure to enjoy all of the romance and excitement of your upcoming
wedding day. As part of your preparations, consult with qualified legal
counsel to evaluate the financial, tax and family challenges created by
your changing marital status.
Copyright © 2005 Integrity Marketing Solutions. All rights
reserved. Some artwork provided under license agreement. This
publication does not constitute legal, accounting or other professional
advice. Although it is intended to be accurate, neither the publisher
nor any other party assumes liability for loss or damage due to reliance
on this material.
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