Elder Law Firm of Steve Bailey

Can Your Older Parent’s New Spouse Swipe Your Inheritance?

“Older couples have found out the hard way that getting married later in life, can throw a wrench into more than just inheritance.”

If your parent gets “serious” about someone he is dating, you might have mixed feelings. While you do not want your parent to be lonely, new romantic relationships for older adults come with complications that younger couples do not face. When your parent, who has been single, divorced, or widowed, contemplates marriage, you might wonder, can your older parent’s new spouse swipe your inheritance?

The short answer is yes without proper legal planning. The new blushing bride or groom can claim part of the estate, if your parent dies first. The precise percentage of the estate going to the surviving spouse can vary between one-third and over one-half depending upon circumstances.

How Can an Older Adult Protect Her Child’s Inheritance If She Remarries?

There is no way to guarantee your children’s inheritance when you remarry, unless they are under the age of eighteen. Minor children usually have a claim to a portion of a deceased parent’s estate. Once your kids turn 18, however, they do not have an automatic right to inherit from you.

You can sign a prenuptial agreement before getting married and write new wills after you get married, but people have successfully busted prenups and contested wills. They are not written in stone. Once you are gone, your surviving spouse could go back on her word and challenge these documents. If a judge sets aside the will and prenup, the widow could demand her legal share of your estate.

Alabama is unique among states because it’s law allows a spouse to be completely disinherited if your parent’s assets are owned by a living trust that avoids probate. A trust can also be contested just like a Will but it is more difficult than a will and as long as the trust was created when your parent had mental capacity and was under no undue influence it will be upheld.

What Other Fall-Out Can Happen When Seniors Marry?

Older couples have discovered the hard way, that getting married later in life can throw a wrench into more than just inheritance. Remarriage can cause a senior to lose Medicaid and Supplemental Security Income (SSI). Tying the knot can make you ineligible for your former spouse’s pension, Social Security retirement or disability income, and alimony.

More couples over the age of 55 are skipping the altar than ever before. In just the last decade, the numbers have jumped 75 percent. Many are living together as unmarried couples. Some have a ceremony that does not create legal rights.

The financial consequences of remarriage later in life can be severe to the new spouses, their children, and grandchildren. To protect yourself and your family, talk with an elder law attorney in your area. State law will control most issues, and the laws vary from one state to the next. This article discusses the general law.

References:

The New York Times: “When Your Parents Remarry, Everyone Is Happy, Right?” (accessed March 24, 2018) https://www.nytimes.com/2018/03/22/your-money/parents-remarry-inheritance-children.html

“Truce” Among the Champ’s Family Means His Estate Settlement is a Knock Out

Muhammad Ali’s estate was relatively easy to settle, by celebrity heavyweight standards, provided the truce between his nine kids and his widow holds. The only item remaining is the venting of grievances and writing the checks, says TrustAdvisor’s recent article “Muhammad Ali Kids Fight Stepmom Over $80 Million Estate Plan.”  However, grievances can get fierce, especially with second-generation boxers with grudges to resolve. Don’t count this match over until the last papers are signed.

Most of Ali’s kids—children of several different mothers—aren’t too friendly with their dad’s widow Yolanda or “Lonnie.” They claim that she tried to isolate Ali as his Parkinson’s disease progressed. Another sore point: the will reportedly gives Lonnie a double share of the estate.

Only the youngest of the kids, Asaad, is on Lonnie’s side. She adopted him as a baby, and they’ve always been close. The other kids resent her, especially since she’s going to get $12 million from the estate … compared to their $6 million apiece.

The kids dislike each other only a bit less, so chances are good that a unified front against stepmom Lonnie will fade. But Ali’s estate plan at least eliminates most of the classic disagreement that drives families apart permanently. All of the Champ’s kids get an equal share, so there’s no favorite and no special treatment.

Yolanda’s double share is much less than it would have been naturally. Ali’s attorneys helped him make some decisions when he was still in his peak earnings cycle.

Ali died in Arizona, where he and Lonnie had lived since 2005. It’s a community property state, so Lonnie could simply claw back half of the money Ali earned since he married her 30 years ago—like the $50 million Ali earned for selling his personal brand and a secondary $2 million rights package he cashed out three years before his death.

Lonnie was Ali’s third wife, and his lawyers insisted she sign a prenuptial contract. However, Ali refused to enforce it. She ended up with the house, the art collection and half of a $2 million bond portfolio. He kept the real estate, so the proceeds from the eventual sale of those assets go to the kids, not Lonnie. They also get their share of his holding companies.

Ali’s estate planning lawyers knew their stuff. As a result, their client’s kids don’t have the common concern that so many blended families face. That’s that dad’s last wife will squeeze them out of the family fortune.

Reference: TrustAdvisor (January 9, 2017) “Muhammad Ali Kids Fight Stepmom Over $80 Million Estate Plan”

 

Love Lessons for the Second Time Around

“As people find love for the second time, there is the initial euphoria and then the reality that 'this time it’s different' settles in.”

Although divorces are up for people over the age of 50, the good news is that many are finding love again, and remarriages for people over 55 are also on the rise.

Forbes’ recent article, “What You Should Know Before Remarrying,” cautions that you’re no longer the 20-something with just your hopes and dreams entering into a marriage. Now you’re apt to be a person who’s built a career, a family, and wealth over a lifetime. As you get older, you now see that there are other considerations when entering into marriage again.

Finances: You should have a money conversation with your future partner, and check each other’s credit report to discuss plans to handle any negative credit information or debt. Talk about each other’s budgets, current obligations, and promised obligations in the future like a college education for children or grandchildren, supporting kids or other relatives, paying alimony and caring for elderly parents.

Children: Get ready for the many emotions your children may experience. If necessary, seek a family counselor who has experience with blended families and step-parenting issues.

Assets: You and your future spouse both will have had years to accumulate substantial assets and your kids may have thoughts on what happens with those assets if you divorce or pass away. Speak with an experienced estate planning attorney to be certain your assets are divided in accordance to your expectations. One option is a prenuptial agreement that says exactly what happens to your assets in the event of divorce or death, and may ease any worries of your offspring that they won’t be left out of an inheritance. There’s also a Qualified Terminable Interest Property or “QTIP” to consider. You can set this up to pay a second spouse the income from investments and let him or her live in the home you may have owned with your ex-spouse until the second spouse passes away. And you can make it so the second spouse won’t be able to sell the assets. Once the second spouse passes, your children can be named as the final beneficiaries.

Income: Look at your respective cash flow to determine how it may change if you marry. If you’re receiving a pension from a spouse due to divorce or death, ask the company’s HR department to see if your pension changes if you remarry. If you’re a widow or an ex-spouse eligible for a survivor's Social Security benefit, you may become ineligible if you remarry before age 60. At that point, typically you can remarry and still be eligible for the benefit. If you are receiving retirement Social Security on your ex-spouse’s record, a remarriage can stop your eligibility for the benefit; however, you may be eligible for your current spouse’s benefit.

Health: When you remarry at 50, “in sickness and in health” may mean “sicker and possibly even sicker.” Discuss past and current health problems, along with family health histories to prepare financially. See what you both have available to help with healthcare costs, like retiree healthcare plans and health savings accounts (HSA) that can help cover medical expenses, plus long-term care insurance.

These are difficult topics to discuss, but these discussions will help your second marriage to start off right.

Reference: Forbes (October 16, 2016) “What You Should Know Before Remarrying”

A Few Words of Advice for Getting Married in Your Golden Years

“First comes love, then comes.... Hold on, not so fast there.”

If you're in your senior years, you may want to think twice before tying the knot. The love bug can bite at any age, and that can include pain in your wallet. This advice comes from The Hartford (CT) Courant in its recent article “Fit to Be Tied? Think Twice About Marriage in Your Golden Years.”

A late marriage can mess up your previous plans for your estate, personal finances, as well as any advance directives for your end-of-life health care. It can also impact decisions you've made and will make, in addition to those of your spouse and heirs.

No one is saying that older folks shouldn’t marry. They just need to be aware of the impact it may have on their plans. Elder law attorneys advise that those thinking about marriage later in life, at the time when personal wealth is typically the highest, understand the laws on the property rights of both spouses.

Property owned jointly or exclusively by either spouse is deemed to be marital property when it comes to divorce settlement or settling an estate in many states. If you understand the applicable property rights before the marriage, it’ll let you modify your wills, powers of attorney, health care proxies and designated beneficiaries to avoid legal conflicts in the future. Those who marry later in life must face several estate planning issues younger couples don’t. For example, there may be an accumulation of considerable assets or both may have children from earlier relationships.

Marriage is a legal contract between two people that can only be ended by death, annulment or divorce. The laws concerning marriage typically aim to protect the rights and interests of both spouses. One spouse can’t entirely “disinherit" their surviving spouse, regardless of what he or she writes in a will. Under Alabama law , a surviving spouse is entitled to sometimes more than half of their late spouse’s estate for the rest of their life after all its liabilities are settled unless their late spouse used a trust instead of a will.

A good idea to eliminate possible hard feelings is a professionally drafted prenuptial agreement. This document details the legal course to be followed in the event of divorce and decreases the possibility of major disagreements.

Reference: The Hartford (CT) Courant (Sept. 24, 2016) “Fit to Be Tied? Think Twice About Marriage in Your Golden Years”

Prenup Isn’t a Four-Letter Word

“The phrase ‘prenuptial agreement’ shouldn’t be a deal breaker.”

Young couples going into their first marriage with little or no assets don’t usually have much to lose by combining their assets as they start to build a family and plan for the future. However, The Pittsburgh Post-Gazette says in a recent article, “Financial planners: Prenuptial agreements shouldn't be a deal breaker in remarriages,” that marriages can be more complex when they happen later in life. This is especially the case when both spouses have children from past relationships and separate assets they’ve acquired over the years. It can be even more complicated if one spouse has more assets than the other.

When you start out early with very little and you acquire your assets together, arguably they should be shared, but that’s not necessarily true if you come to the marriage with assets. In contrast, when you enter the marriage with assets, many feel that those assets should be held separately—but assets built during the marriage should be put together. Keep assets entering into the marriage separate to protect the heirs of both spouses.

Pew Research Center in 2013 found four out of ten new marriages included at least one partner that had been married prior. The researchers concluded that there were two reasons for the increase in remarriage: (i) divorce rates in the U.S. have increased since 1960, so more divorcees may be looking to remarry; and (ii) Americans also are living longer, so divorcees, widowers and widows have more time to marry and divorce and marry and divorce.

Prenuptial agreements give both parties the ability to identify exactly what each of their assets are at the time of marriage, so they can show what they brought in if they divorce in the future. In order for a prenup to be enforceable, there must be a full and fair disclosure of all assets and liabilities. Any hiding of assets could void the agreement. There also must be no duress—no pressuring a bride to sign a prenup as the organist is playing the wedding march and threatening harm if she doesn’t. It should be done well in advance of the wedding, and when considering a prenuptial agreement, the fiancée should seek independent legal advice.

A big benefit of a prenuptial agreement is that it frequently can mesh with a person’s estate plan—including life insurance, wills, trusts, retirement plans and beneficiary designations. If the assets remain separate in a marriage, the prenup will protect the surviving spouse and the heirs of the deceased spouse.

A spouse entering into a second marriage with more assets than the other spouse can leverage a prenup to create a trust that will pay interest income to the surviving dependent spouse for as long as he or she lives. When that person dies, the money from the trust is distributed to the children of the first spouse who passed away. This is used a lot with higher net worth couples when at least one of them has been married before. The same strategy to provide protection to heirs can also be accomplished via a will, but a will is restricted to death while a prenuptial agreement covers the possibility of a divorce as well as estate planning.

Prenuptial agreements have a negative connotation, but think of them as an estate planning tool—not a divorce planning tool. This makes it easier for people to grasp their importance and agree to sign one, especially in second marriages.

Prenuptial agreements have been thought of as taking the romance out of a relationship, but what truly removes romance is when someone tries to take advantage of the other spouse who enters the marriage with more assets.

Reference: Pittsburgh Post-Gazette (July 29, 2016) “Financial planners: Prenuptial agreements shouldn't be a deal breaker in remarriages”

The Daughters of Casey Kasem and Peter Falk Lobby for Elder Law Legislation

"The legal process they had to endure to visit their fathers was unnecessary and too expensive for the average person."

This story illuminates just one of the heartbreaking problems that can emerge in a blended marriage when the referee is out of the game. Second marriages, if not addressed in estate planning before one of the spouses becomes incapacitated or passes, more often than not results in alienation, disharmony, and disinheritance of either the spouse or children from a prior marriage.

The daughters of two late celebrities are looking to find easier ways for family and friends to visit ailing elders. They've brought separate pieces of legislation to Washington State in memory of their fathers' end-of-life struggles.

KOMO News recently ran a news item, "Daughters of Casey Kasem, Peter Falk tackle elder visitation," which tells their similar stories. Both Kerri Kasem and Catherine Falk were blocked from visiting their fathers, Casey Kasem and Peter Falk, because of personal disagreements with family members. Both men were suffering from serious illnesses.

The daughters had to take legal action to see their fathers. As a result of their experiences, the women are independently working in several states to provide a way for close friends and relatives to visit ailing or incapacitated elder family members without needing to file for guardianship.

Kasem introduced legislation in 11 other states this year and fought for previously passed legislation in Texas and California, as well as a successful bill in Iowa. Falk introduced legislation in more than 20 states this year. However, in Washington, their proposals haven't found overwhelming support, as some feel the new legislation is unnecessary and that the current laws protecting vulnerable elders are adequate.

Radio personality Casey Kasem had dementia. His three adult children from a previous marriage and Jean Kasem, his second wife, fought a heated legal battle over his care. Peter Falk, star of the 1970s TV series "Columbo" became incapacitated in 2008 due to dementia. Likewise, Catherine Falk battled her father's second wife in court to win occasional visits with her father.

Falk's Washington bill says a guardian can't restrict an incapacitated person's right to visit and communicate with anybody. Their consent is presumed based on their history with people, such as close relatives with positive relationships. However, the guardian could block visitation if they showed good cause. The bill would also require guardians to notify close relatives and others if the incapacitated person moves to a new home, spends time in the hospital, or dies.

Kasem's main bill permits a person to petition a court for visitation rights. Another proposal Kasem supports is one that requires a guardian to tell close relatives and friends if an elder spends significant time in the hospital or has died.

None of the bills has been scheduled for a vote.

Kasem said she would be interested in joining forces with Falk or others for guardianship reform legislation.

Reference: KOMO News (January 31, 2016) "Daughters of Casey Kasem, Peter Falk tackle elder visitation"

"Super Bad" Battle Still Raging over James Brown's Estate

"It is an odd settlement. It doesn't resolve anything."

A judge is expected to sign an order to uphold the settlement in the James Brown Estate, which will resolve five of the six lawsuits contesting the Godfather of Soul's will. Only Tomi Rae Hynie's suit contesting the Will remains, according to a WRDW.com story, "James Brown Estate: What a settlement means for other pending lawsuits."

While the settlement fully resolves the Will contest claims of James' children, the fight is far from over. Brown's wife, Tomi Rae Hynie, is still contesting the Will, making the status of the Will's validity still unresolved.

About a year ago, the South Carolina Supreme Court put everything on hold. Now the only thing still in progress is the question of whether or not Tomi Rae Hynie is the legal spouse of James Brown. That issue is being heard by the Court of Appeals. It is the one issue where all the Brown children are united: they want the judge's ruling that Tomi was Brown's spouse overturned.

If she's his wife, she controls the money flow from Brown's copyrights. That's money that should go into a trust, according to the Will. If Tomi Rae isn't Brown's wife, the kids control that money.

If the appellate court rules that Tomi Rae is indeed the legal wife of James Brown, then they'd have to next determine if the prenuptial agreement is valid. The court could hold that she's not the wife, or they could decide it's a jury issue. If so, this could go on for years.

As it stands now, the four adult children named in the settlement would keep the property Brown wanted them to have, remove the Will contest clause, and give them $147,000 collectively. As a part of the deal, they'll cooperate with the estate and end their legal fight.

Reference: WRDW.com (January 26, 2016) "James Brown Estate: What a settlement means for other pending lawsuits"

What Will Happen if I Don't Update my Beneficiaries?

"When was the last time you checked your beneficiary designations on your retirement plans and other accounts?"

This is a very important step in estate planning because at your death, certain assets pass to beneficiaries named on your accounts. It doesn't matter if someone else is named as the recipient of your assets in your will!

Let's look at one of the big implications of failing to review your beneficiaries.

The Ex-Spouse

The New Hampshire Union Leader explains in "The law determines your beneficiaries unless you intercede," that even though New Hampshire has a lower divorce rate than the national average, if you're recently divorced, you need to do some fast estate planning. The divorce decree you signed doesn't automatically terminate your ex's beneficiary designation on separate documents like your employer-sponsored retirement accounts, IRAs, and life insurance policies. If your former spouse remains as the beneficiary on an account, he or she will most likely inherit those assets instead of your children or your new spouse.

Let's take that a step further: Even without a divorce, there can be unintended implications for your money after your death. If, in your retirement plans, you named your spouse as the primary beneficiary, he or she has the right to transfer all or part of the retirement assets into his or her own IRA account after your death. The surviving spouse is entitled to then name the children from a previous or future marriage as beneficiaries once it is his or her own money. Something like that could result in the original IRA owner's children being legally cut out of any benefits and this happens all the time.

Spousal Waiver

Spousal rights laws say that your spouse must be the primary beneficiary of a 401(k) or profit-sharing account. Your spouse can waive this requirement in writing so that other estate planning strategies can be implemented. A spouse who is financially independent and wants to earmark the account for philanthropic pursuits may want to use the waiver; or where children from a first marriage are more likely to need the money. If you're unmarried, you can name whomever you want as the primary beneficiary.

Tax laws also detail how retirement plan assets must be distributed to your beneficiaries at your passing, but if this is done properly, your beneficiaries may be allowed to continue the tax deferral for some time. Note that these rules are complicated and change frequently, so you should discuss them with an experienced estate planning attorney.

It is essential to be certain that your intended beneficiary designations are in sync with your estate documents. To ensure that this is the case, visit your estate planning attorney. Your attorney will help with terms like "per stirpes" and "per capita." A qualified trusts and estates lawyer can also help you deal with planning for minor children and those with special needs.

Reference: The New Hampshire Union Leader (January 24, 2016) "The law determines your beneficiaries unless you intercede"

New Orleans Saints Owner in Middle of Estate Battle - Why Blended Families Must Have Remarriage Protection

 "The value of the trust has been estimated at approaching $1 billion."

All of the expense and heartache you are about to read about could have been avoided if only the original Mrs. Benson had included remarriage protection in her estate plan.

Tom Benson, the San Antonio and New Orleans billionaire, has been ordered to give a deposition in his family estate legal case by Probate Judge Tom Rickhoff.

The San Antonio Express-News reported in "Billionaire Benson ordered to give deposition in estate fight," that Judge Rickhoff said that if the two sides—Benson versus his daughter Renee Benson and her two children—can't agree on the date and place for the deposition, the judge will handle the details as he sees fit.

The deposition will be conducted privately without the public and the media, and the deadline is fewer than two weeks before the start of a scheduled jury trial over control of a trust created in 1980 after the death of Tom Benson's first wife, Shirley Benson.

The trust assets include nearly all of San Antonio-based Lone Star Capital Bank, 50% of five auto dealerships, a portion of a large Texas ranch, a private plane, real estate, and cash.

The deposition request was made by Renee Benson and has been at the center of a sharp disagreement for more than a month. Tom Benson's lawyers filed a brief last month opposing any deposition, claiming there was nothing left to discover in the case since Renee has owned all the Shirley Benson Testamentary Trust documents for more than 10 years.

Tom Benson's lawyers say that the request amounted to "harassment."

Renee Benson's lawyer, Bennett Stahl, stated that the only way the court will receive Benson's testimony is through a deposition since the 88-year-old billionaire isn't expected to testify at the trial. Tom Benson's lawyers say that if he has to give a deposition, it should be in New Orleans.

Stahl added that he was happy with the order. "A deposition allows me, as Renee Benson's attorney, the opportunity to ask important questions directly to her father and hear the answers in his own words," he said.

What happens to the deposition if a settlement occurs? A jury trial would be avoided and the deposition would be part of the settlement. But sources say that a possible settlement is not imminent.

The purpose of the litigation is to establish a new trustee for the Shirley Benson trust. Judge Rickhoff recently appointed former San Antonio Mayor Phil Hardberger and estate planning lawyer Art Bayern as temporary co-receivers of the trust, removing Tom Benson as trustee. Renee Benson wants to become the trustee.

About a year ago, the twice-widowed Tom Benson said he was changing his succession plan to cut out his only surviving child, Renee and her children, in favor of his third wife. That news triggered several lawsuits challenging the elder Benson's mental capacity to make estate decisions. Renee has alleged in lawsuit briefs that Tom Benson is being brainwashed and manipulated by his current wife and business associates. A judge in New Orleans ruled last June that Tom was competent.

Reference: San Antonio Express-News (January 13, 2016) "Billionaire Benson ordered to give deposition in estate fight"