“So will her children end up with the lake house?"
Local attorney Kim Cullman Estess, who specializes in estate planning, trust and probate law, said such situations are common, but senior couples can calm nervous children and spell out their intentions with some help from legal counsel.
Some senior couples decide to forgo marriage and live together. Estess said she doesn’t discourage the idea. It may make sense for Medicaid qualification or Social Security income.
However, for some couples, marriage is the best choice emotionally, Estess continued. And, realistically, there may be tax advantages to marriage.
“You need to make an informed decision,” she said.
The first— and most important — task occurs before you visit your attorney. Talk with your fiancé about what you want in your estate plan. Understand your fiancé’s choices. Then talk with your families.
Credit: Getty Images
Credit: Getty Images
“The biggest thing is open discussion,” said Estess. “It sounds scary. But really it is a gift of love. You’re trying to eliminate fighting later.”
Not only do you make your plans known, she added, but the open dialogue with your adult children can also uncover issues while you are still alive to address them.
Prenuptial agreements can ease tension among adult children worried about parents heading to the altar. The agreements, which are binding contracts, Estess noted, can include financial, real estate, personal property and more. Ohio law now recognizes postnuptial agreements as well.
“This is a great thing to explore. It sets expectations,” Estess said. “But you can achieve similar goals with trusts.”
Revocable Living Trusts are “lifetime plans” that can offer more control now and after your death. “Honestly we refer to it as a book of instructions. It’s how you want your affairs managed,” said Estess.
As the title suggests, these trusts are created before your death, and you can be in charge until your death. You can make changes, let’s say, to add that new granddaughter or delete an asset you sell. Some couples distribute funds or assets to children before their deaths to ease tensions. Changes stop when you die.
Trusts let you avoid probate, Estess emphasized. That can save time and court costs.
Many seniors who marry again want to provide for their new spouse until this new partner dies, even if that partner outlives them. The trust owner has separate assets for adult children and wants the bulk of their estate to go to these children after the partner’s death.
Trusts offer that flexibility. Estess said. Do you want to ensure a shady stepchild doesn’t help themselves to funds? Do you want to be clear that your new spouse can live in your current home until he is unable? Trusts can spell that out.
And trusts can cover remarriage of the surviving spouse.
“For example, if the surviving spouse remarries, (the trust can state that) the new spouse must sign a prenup saying they will not come after the trust,” Estess said.
What assets go into a trust?
“Ideally, almost everything,” said Estess. That includes bank accounts, brokerage accounts, primary and vacation property, rental property, even shares of businesses.
Future distributions
In addition to telling the trustee how to distribute assets and to whom, the trust can detail how you want your final bills paid and how to handle future distributions and charitable donations.
Distribution of personal property, including great grandmother’s diamond broach, prized autographed baseballs and more, can be handled through a memorandum to the trust, Estess said.
Your trustee can be a family member. If the trust covers both you and your spouse, you can select one member from each family as co-trustees.
“Know your families,” Estess said. Ideally choose someone who has always made sound financial decisions. Or designate your accountant or attorney.
After your trust is established, you and your new spouse have work to do. While your attorney can draft a deed transferring your primary residence to the trust, you will be responsible for transferring other property, including vehicles, bank and brokerage accounts, business shares, etc.
It’s especially important with life insurance policies and other assets designating a beneficiary, Estess said. Beneficiary choices can override trust designations, so documents such as life insurance policies must be payable to the trust.
Assets you forget to add to the trust can be covered via a document known as a pour over will, said Estess. And trusts do not cover your medical decisions. You must have a medical power of attorney. Estate attorneys can also help you with those documents as well as providing directions on how to complete funeral planning.
“You make your wishes known while you are still alive,” she said.
Managing estate issues
Attorney Kim Cullman Estess will be hosting a seminar on navigating remarriage, adult children’s concerns and more at the Washington Twp. Rec Center 10 a.m.-noon Feb. 20. “Estate Planning and the Other Woman” is $2.50 for rec center members or $5 for non-members.
Register at washingtontwp.org/recreation.
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