Prenuptial Agreement

Estate Planning for a Blended Family?

A blended family (or stepfamily) can be thought of as the result of two or more people forming a life together (married or not) that includes children from one or both of their previous relationships, says The Pittsburgh Post-Gazette in a recent article, “You’re in love again, but consider the legal and financial issues before it’s too late.”

Research from the Pew Research Center study shows a high remarriage rate for those 55 and older—67% between the ages 55 and 64 remarry. Some of the high remarriage percentage may be due to increasing life expectancies or the death of a spouse. In addition, divorces are increasing for older people who may have decided that, with the children grown, they want to go their separate ways.

elderly couple ARAG members
Getting married for the second time? Don’t forget to review your estate planning documents.

It’s important to note that although 50% of first marriages end in divorce, that number jumps to 67% of second marriages and 80% of third marriages end in divorce.

So if you’re remarrying, you should think about starting out with a prenuptial agreement. This type of agreement is made between two people prior to marriage. It sets out rights to property and support, in case there’s a divorce or death. Both parties must reveal their finances. This is really helpful, when each may have different income sources, assets and expenses.

You should discuss whose name will be on the deed to your home, which is often the asset with the most value, as well as the beneficiary designations of your life insurance policies, 401(k)s and individual retirement accounts.

It is also important to review the agents under your health care directives and financial powers of attorney. Ask yourself if you truly want your stepchildren in any of these agent roles, which may include “pulling the plug” or ending life support.

Talk to an experienced estate planning attorney about these important estate planning documents that you’ll need, when you say “I do” for the second (or third) time.

Reference: Pittsburgh Post-Gazette (February 24, 2019) “You’re in love again, but consider the legal and financial issues before it’s too late”

Prenups for Tech Entrepreneurs

Maybe you made your first million in a crowdfunded start up, and now you’re working with venture capitalists on your next big idea. If marriage is on your event horizon, do you need a prenup?

Not every tech-savvy entrepreneur makes millions, but many millennials are finding themselves in the right place, at the right time, with flush bank accounts. If that’s the case, says CT Post, in “Millennial Millionaires and Their Prenups-What They Need to Be Thinking About,” they need to think very seriously about having a prenup. Not very romantic? No, but with a lot to lose, you want to protect both spouses.

Stockbrokerarbitrationfraud4The use of prenups has increased five times in the past two decades for millennials, according to the American Academy of Matrimonial Lawyers (which defines millennials as those ages 18 to 34). Celebrities like Kylie Jenner and Justin Bieber have signed premarital agreements with their partners, and many young marrieds active in the startup world think that premarital agreements are a wise move.

A prenup lets entrepreneurs protect what they have worked so hard for. Up-and-coming millennials and entrepreneurs are waiting longer to get married. As a result, they typically have more assets, accumulated wealth from a 401(k) and stock options and possibly real-estate ventures. They could potentially lose a lot of what they've earned if a prenup isn’t put into place.

They also need to protect their intellectual property, and the very idea of a business has to be protected. For example, with Kylie Jenner and her makeup line, she decided to shield what assets she has now and those she’ll accumulate throughout her marriage. By doing this her business won’t be communal property subject to a marital separation agreement or divorce.

If you think a prenup is good for you and your fiancé, remember these guidelines:

Work with a business attorney. Your legal counsel must be business savvy and understand how to best plan for future contingencies. And each party has to have their own separate attorney for a prenup to be valid.

Plan ahead with a prenup. Don’t start arranging for a prenup a month before your wedding. If you have significant assets, it will take some time to draft.

Look at the details. Determine if your partner has offshore accounts. It also matters where you will reside. Some techies, originally from China or India, have international attorneys, which increases the time required to draft and finalize an agreement.

Every prenups is unique. There’s no one size fits all. There are many variables and they’re unique to each relationship.

Still not convinced? Imagine yourself suddenly single, with a demanding 24/7 job, children to raise and a house to run. If that would work better with a plan in place, then you need a prenup.

Reference: CT Post (November 5, 2018) “Millennial Millionaires and Their Prenups — What They Need to Be Thinking About”

Generational Divide Between Musicians Now and Then

As singers and actors from prior generations die and we learn about their business lives

Maybe people who went into the music in the past, led with their hearts and souls, like Aretha, but the difference in income is astronomical.

ArethaAs singers and actors from prior generations die and we learn about their business lives, there’s a huge disparity between their earnings and that of today’s artists. Stars from the past, beloved and working into their later years, continue to pass away with estates that wouldn’t be deemed sufficient for a CEO to change jobs today.

Wealth Advisorsays in its new article, “Aretha Franklin’s Estate Almost Criminally Undervalued Even At $80 Million,”that description now fitsAretha Franklin, the Queen of Soul.

She sold 75 million records and is credited as a songwriter on hundreds of albums by other artists. However, even the most generous estimates of her career earnings are no more than $80 million.

Compare her to Taylor Swift. She started at about the same age, has been working one fifth as long and the same calculations say she’s worth more than $300 million.

The mega stars in Aretha’s imperial period didn’t earn as much as they do today. Management was often aggressive and took a huge chunk of every dollar earned from the artists’ record sales, concerts, merchandising and media appearances.

Aretha also didn’t do herself any favors, by allowing her husband to manage her early career. When they divorced, he took a lot of her lifetime earnings with him. A raw deal or not, it was the way the industry worked at the time. As a result, paying alimony meant she had to keep working for her ex.

That may be why Taylor Swift hasn’t gotten married. Despite a finely crafted prenuptial agreement and trusts to protect her money, a wrong decision could cost her hundreds of millions of dollars.

The music industry has changed dramatically. Traditional revenue sources never really grew much bigger than they were in the 1960s. Some, like selling the actual music, tanked and have yet to revive. Today’s music icons, like Taylor Swift, thrive because they manage their own tours and take in ticket income rather than record sales. Many own their own publishing outlets, and that maximizes their percentage of every song they sell. That’s not how it worked in Aretha’s day.

 However, Aretha died with money in the bank. Her children will inherit considerable sums. She most likely gave huge amounts to charity and did it in the most tax-efficient way her advisers could find.

Just like Prince, it’s safe to say that sales of her recordings will take a leap, anything as yet unreleased will be repackaged and her name and image will start being monetized. As a brand and a legend, she will be enjoyed by new generations of music lovers. Her family will benefit, and her fans will grow in number.

Reference: Wealth Advisor (August 20, 2018) “Aretha Franklin’s Estate Almost Criminally Undervalued Even At $80 Million”

Making Financial Planning Part of Your Wedding Planning?

Once you’ve worked through the financial and legal part of planning your new life together, many issues that plague marriages will be resolved.

No, it’s not as romantic as planning a honeymoon along a sandy beach. But once you’ve worked through the financial and legal part of planning your new life together, many issues that plague marriages will be resolved. That’s romantic!

26201363701_de6af9d0ed_oThe leading cause of stress in relationships in general and marriages in particular are finances, as reported in an article from My Primetime News, “Hearing Wedding Bells? Be Sure Finances are Included in Your Planning,”by Gerald Rome, Colorado Securities Commissioner. As many as a third of people, say that money is the primary source of discord in their partnership. Therefore, why not eliminate the problem by addressing it?

Rome notes that summer is wedding season. Whether you’re taking the plunge later in life—maybe for the second time or advising a young couple about to make the ultimate commitment—much of the thought process is the same. There’s perhaps no topic less uncomfortable, but more important, than finances.

Before you or a loved one say, “I do,” be sure to consider the following:

Transparency.Many divorces stem from a lack of honesty about finances. Before you walk down the aisle, be sure you know everything about your betrothed’s financial past, spending habits, investing philosophy, and goals for the future. That means sharing information on major debts from education, business, and home loans, as well as credit scores and bankruptcy history. If you’re entering a second marriage, be truthful about any alimony being paid to or received from a former spouse.

For those marrying later in life, think about how or whether to merge accumulated assets and how to compromise on handling financial affairs, after what may have been many years of individual decision-making.

Financial Roles.For co-mingled finances, it’s important to be certain that you’re clear on who will handle what. Many financial issues that arise later in life, are due to one spouse not knowing what’s going on and being deluged with a mountain of new information and decision-making, in the event of a spouse’s sudden illness or death.

Prenuptial Agreement.Detailing what will happen to assets if the marriage fails, isn’t about a lack of trust—it’s about being prepared.

Estate Planning.Organize your property to ensure that no matter what happens, your family’s financial needs will be met. This includes drafting powers of attorney, creating or revising your wills, purchasing life insurance policies, revisiting retirement accounts and investment funds, establishing trusts and naming beneficiaries and considering any tax implications.

By dealing with the business side of marriage from the start, you may learn a lot more about your intended than you would if you had avoided the conversation. Once you know what each other’s financial status is, good or bad, you can figure out how to fix it—or enjoy it! By working with an experienced estate planning attorney and getting your estate plan prepared, you’ll be ready to relax and enjoy each other, without any nagging worries about financial or legal mysteries.

Reference: My Primetime News (May 2, 2018) “Hearing Wedding Bells? Be Sure Finances are Included in Your Planning”

How to Address the Business Side of a Second Marriage

before your wedding celebration, consider these steps

A second (or third) marriage comes with certain legal and financial issues that are best dealt with before you walk down the aisle.

26201363701_de6af9d0ed_oA new marriage feels like a fresh start and a chance to move forward in life.  However, before your wedding celebration, consider these steps recommended in Nasdaq’srecent article, “Getting Remarried? 5 Financial Steps to Take Before Tying the Knot (Again).”

Create a consolidated net worth statement. One fundamental mistake many couples make is failing to look at their combined net worth, until they start talking about how they will pay for their wedding or another big-ticket item. Those who remarry frequently have more complex financial responsibilities, such as child support, liquid and illiquid investment assets, as well as estate planning and tax-planning strategies. The best course is to be upfront from the start to avoid damaging your relationship in the long run. Take time to review your individual financial situations, including liabilities, before you create a consolidated statement of net worth.

Sign a pre or postnuptial agreement. This can be uncomfortable but can be valuable for both parties, if there’s a divorce. A pre or postnuptial agreement is particularly important,  since it's the only way to legally claim specific assets within a marriage. In addition, a prenuptial agreement may ensure that any children within the marriage are financially protected, in the event one spouse dies. It’s also important to remember, even if you're recently married and don't have a formal prenuptial agreement, state law will often have one for you.

Think about all of your kids. Some spouses who were married previously may bring children into their new relationship. This creates many financial issues. Determine as a couple how you’ll financially address major expenses, like health care, child care, and tuition. When you've decided, discuss your plan of action with an attorney to be sure you're considering all potential options and their long-term implications.

Update your beneficiary designations. This is a common error. Assuming you want to name your new spouse as a beneficiary, you should review all your accounts and update the documents.

Review and update your estate plan. This step often gets forgotten in the rush of planning the ceremony, reception and honeymoon. You’ll both need to meet with an experienced estate planning attorney to review your individual wills from the past and prepare new wills, powers of attorney and health care directives to reflect your new status.

Reference: Nasdaq(April 20, 2018) “Getting Remarried? 5 Financial Steps to Take Before Tying the Knot (Again)”