Presenting a live 90 ‐ minute webinar with interactive Q&A Estate Planning for Second Marriages and Blended Families Incorporating Pre ‐ and Postnuptial Agreements, Meeting Obligations to Children and Spouses, and Maximizing Tax Benefits WEDNES DAY, AUGUS T 31, 2011 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific T d Today’s faculty features: ’ f l f Bridget K. S ullivan, Member, Sherman & Howard , Denver hareholder, Midgett & Preti , Virginia Beach John T . Midgett, S Kristin A. Pace, Partner, Fitzgerald Abbott & Beardsley , Oakland, Calif. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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Estate Planning for Second Estate Planning for Second Marriages and Blended g Families Crafting Estate Plans to Incorporate Pre- and Post-Nuptial Agreements John T. Midgett john.midgett@midgettpreti.com j g @ g p 5
Overview “Marriage is the triumph of imagination over Marriage is the triumph of imagination over intelligence. Second marriage is the triumph of hope over experience.” – Oscar Wilde p p 6
Challenges and Issues Ethical Issues of Joint Representation Ethical Issues of Joint Representation Titling of Assets Beneficiary Designations Beneficiary Designations Choices of Fiduciaries 7
Ethical Issues of Joint Representation Model Rules of Professional Conduct Model Rules of Professional Conduct Rule 1:7 – a lawyer shall not represent a client if the representation involves a current conflict of p interest. ACTEC Commentaries RE: MRPC 1.7: Some conflicts of interest are so serious that the informed consent of the parties is insufficient to allow the lawyer to undertake or i ffi i t t ll th l t d t k continue the representation (a “non-waivable conflict). conflict). 8
Some Indications of Potential Conflicts of Interest Pre-Nuptial Agreement Pre Nuptial Agreement Post-Nuptial Agreement Either or both spouse has a child or children Either or both spouse has a child or children from a prior relationship Great Disparity in Assets of the Parties G t Di it i A t f th P ti Great Disparity in the Ages of the Parties Past Representation of a Single Party 9
Issues the Lawyer Should Consider Laws of Intestate Succession Laws of Intestate Succession Elective Share Laws Statutes favoring Omitted Spouses Statutes favoring “Omitted Spouses” Joint Tenancy issues Beneficiary Designations on Life Insurance and Annuities Beneficiary Designations on Qualified Retirement Plans 10
Laws of Intestate Succession Statutory “will” Statutory will Is the share for the surviving spouse too little or too large? or too large? How are children to be treated? Children from prior relationships Children from prior relationships Children with surviving spouse? The spouse’s children from prior relationships? The spouse s children from prior relationships? 11
Elective Share Laws Surviving spouse may be entitled to a Surviving spouse may be entitled to a percentage of the TOTAL estate, including non-probate assets p Usually involves litigation to determine Expensive Expensive Divisive 12
“Omitted Spouse” statutes Testator made a will (avoiding intestacy) but Testator made a will (avoiding intestacy) but subsequently marries Invokes statutory presumption that Testator Invokes statutory presumption that Testator did not intend to disinherit spouse 13
Joint Tenancy Issues Joint Tenancy with Surviving Spouse Joint Tenancy with Surviving Spouse With Rights of Survivorship Without Rights of Survivorship Without Rights of Survivorship Joint Tenancy with Children With Rights of Survivorship With Rights of Survivorship Without Rights of Survivorship 14
Beneficiary Designations – Life Insurance Coordinates with Pre or Post Marital Coordinates with Pre or Post Marital Agreements? Who is in control of proceeds? Who is in control of proceeds? Balancing economic needs Each policy must be examined and the E h li t b i d d th beneficiary changed, if needed 15
Beneficiary Designations – Qualified Retirement Plans Consider Pay-out options available to Consider Pay out options available to surviving spouse Who controls balance if any at survivor’s Who controls balance, if any, at survivor s death Trusts as beneficiaries Trusts as beneficiaries “Oldest Beneficiary” rule for measuring lives Marital deduction issues – Battle between RMD Marital deduction issues – Battle between RMD and mandatory income payout. See Rev. Rul. 2006-26. 16
Issues the Lawyer Should Consider Presence and Effect of Pre- and Post-Nuptial Presence and Effect of Pre and Post Nuptial Agreements Presence and Effect of Divorce Decrees and Presence and Effect of Divorce Decrees and Property Settlement Agreements Buy-Sell Agreements Buy-Sell Agreements 17
Issues the Lawyer Should Consider Family Dynamics Family Dynamics Putting the “fun” in dysfunctional “What we have here is a failure to communicate!”- from the movie Cool Hand Luke Jealousy and Greed Control and Management C t l d M t Balancing the interest of “Yours, Mine and Ours” 18
Estate Planning for Second Marriages and Second Marriages and Blended Families Discussion of Prenuptial and Postnuptial Agreements August 31, 2011 Bridget Sullivan, Esq. Sherman & Howard L.L.C. 633 17 th Street, #3000 Denver, CO 80202 (303) 299 8130 (303) 299-8130
Bridget K. Sullivan, Esq. g , q Bridget Sullivan is a Member in the Tax & Probate Department of Sherman & Howard’s Denver office. She p practices in the areas of estate planning, wealth transfer planning, estate administration, trust administration, and litigation related to trusts and estates. Ms. Sullivan ga o e a ed o us s a d es a es s Su a focuses on sophisticated estate planning techniques and prenuptial agreements. She has counseled clients on a variety of wealth transfer strategies and charitable giving variety of wealth transfer strategies and charitable giving techniques to accomplish family giving objectives while minimizing the impact of gift, estate, generation-skipping transfer, and income taxes. transfer, and income taxes. Ms. Sullivan graduated from Yale Law School in 1990. She is named in Best Lawyers in America for Trust and She is named in Best Lawyers in America for Trust and Estates and is named as a Colorado Super Lawyer. 20
1. INTRODUCTION • The principal purpose of a marital agreement is to alter the rights otherwise provided by law of one or both spouses to the property of the other spouse, both spouses to the property of the other spouse, whether upon termination of the marriage by divorce or by death or both. Many states have a marital agreement act which determines the marital agreement act, which determines the rights of parties who have entered a marital agreement, the types of matters that parties may agree to and the enforceability of marital agreements. In most states, marital agreements are enforceable under the terms of state law are enforceable under the terms of state law unless a party did not execute the agreement voluntarily or was not provided full and fair financial disclosure prior to signing the agreement financial disclosure prior to signing the agreement. 21
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