Senior Woman Meets New Man
Elizabeth is a senior woman. She is a very independent person and has been diligent in saving money throughout her entire life. Her husband Albert died five years ago. After his passing, Elizabeth was very lonely until she met Ronald, whose wife Audrey died three years ago.
Now Elizabeth and Ronald are thinking about getting married. They are unsure about whether their respective pensions and retirement benefits will be increased or reduced due to a marriage. An inquiry to their tax advisor is scheduled, but they also have another worry.
Elizabeth is especially concerned that her three adult children, from her earlier marriage to Albert, will not receive her estate after her death.
Second Marriage And Minnesota Law
Under Minnesota law, if Elizabeth does no estate planning, then Ronald will generally get most of her estate if he outlives her. This can be particularly upsetting to Elizabeth's children because, if Ronald dies a few years after Elizabeth, Ronald's and Audrey's children would get most or all of Elizabeth's and Albert's estate.
Estate Planning Options
There are several alternative estate planning steps that can be taken.
Elizabeth and Ronald could sign a premarital agreement before they get married. This can specify that Elizabeth's children would get her assets and Ronald's children would get his. Premarital agreements require some planning so they should be completed some time in advance of the wedding. The law requires that there be full disclosure of all assets and that both parties are treated fairly in the agreement process. It is usually a good idea for each of them to have their own attorney before the agreement is signed.
For seniors with children from a previous marriage, our office almost always recommends a premarital agreement.
Another possibility is for Elizabeth to have her attorney prepare a Trust. A Trust is a separate legal entity and needs a trustee who administers it and the accounts, personal property, or real estate that is placed in the trust. The trust can provide for reasonable support for Ronald during his lifetime with the balance going to Elizabeth's children after both their deaths.
A Very Fair Decision
After meeting with an experienced estate planning attorney, Elizabeth decides to utilize both of these options. She and Ronald come to a very fair decision for their premarital agreement. Since they both have established wealth, they decide to keep things as they were before the marriage, with each planning to distribute assets to their respective families.
Next, Elizabeth and her estate planning attorney discover some weaknesses in her current plans, prompting them to create a trust to distribute her assets after she passes. Previously, her sole estate planning instrument was simply a will. With a trust in place, Elizabeth can rest easy at night knowing that her professional trustee will administer her assets to her children and their families. She does not have to worry about a desperate family member complicating the distribution of her assets.
Finally, Elizabeth and Ronald have Powers of Attorney and Health Care Directives drafted for each other. This also puts them at ease, since these documents dictate how their medical care should be handled if they become incapacitated. Elizabeth has selected her oldest daughter to be the primary health care agent, with her son as the secondary health care agent.
A well-drafted estate plan can make the golden years even brighter for the senior and his or her family.
The contents of this article are for information only and is not to be interpreted as legal advice. For personal legal advice you should consult with an attorney who is experienced in probate law or estate planning. The U.S. Treasury Department requires us to advise you that any written tax advice cannot be used and is not intended to be used by any taxpayer for the purpose of avoiding any penalties that may be imposed under the Internal Revenue Code. Written advice from our firm relating to any Federal Tax matters may not, without our express written consent, be used in promoting, marketing or recommending any entity, investment plan or arrangement to any taxpayer.