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Tuesday, March 5, 2024

Blended Households, Remarriages and Property Planning

Collaboration amongst monetary professionals, household regulation, and belief and property counsel is paramount for shoppers to grasp the impact {that a} potential marriage has on his or her property. Efforts needs to be made to advise shoppers to hunt the recommendation of counsel previous to their marriage, be it the primary, second or third. Based mostly on the jurisdiction, there are sometimes state-specific legal guidelines that can instantly give a brand new partner rights to inherit all or a portion of a consumer’s property upon marriage. Shoppers having the information and steerage earlier than leaping into a wedding will give them the power to plan appropriately. That is very true for these shoppers who’ve their very own youngsters or grandchildren or vital property previous to getting into the wedding. 

People usually consider {that a} will or a belief will legally and successfully management the distribution of their property. Unbeknownst to them, upon their loss of life, state statutes that give rights to particular events or restrictions of sure property from being devised to particular events will reallocate the division of these property. 

Understanding Domicile

Because the aftermath of the pandemic, and as shoppers have develop into extra cellular, usually touring between a number of residences in several states, it is crucial for the funding skilled to contemplate which state’s legal guidelines could also be utilized to the property upon the consumer’s loss of life. Based mostly on a consumer’s residency, the legal guidelines can change. The consumer needs to be suggested to seek the advice of with counsel within the newly domiciled state as to the prevailing belief and property plan not just for tax functions but additionally to evaluation and supply a authorized evaluation if any adjustments and updates to the paperwork needs to be made in order that they legally devise the property in accordance with the consumer’s needs. 

Counsel ought to think about the impact of any governing regulation clauses included within the paperwork such that the implications of any relevant statutes are thought-about and drafted to keep away from their impact, if mandatory. If the newly domiciled state statute would negate the intent of the consumer, the consumer might think about the need of drafting a pre or postnuptial settlement that might protect and defend their rights and intentions. 

For instance, Florida’s Elective Share Statute 732.201, permits a surviving partner an election to take towards what was left to her or him within the deceased partner’s will or belief, sometimes permitting the surviving partner to take a proportion of the deceased partner’s property. This statute would doubtlessly circumvent all of the cautious planning, work and cash expended by the consumer crafting a belief and can supposed to hold out their needs with a lawyer who’s unfamiliar with this Florida-specific statute. 

The Significance of Prenuptial Agreements and their Impact on the Property Plan

Many individuals have the misperception that prenuptial or postnuptial agreements are authorized devices that solely point out who will get what in a divorce; in actuality, nevertheless, they most frequently additionally dictate what the surviving partner shall obtain within the occasion of the loss of life of a partner. These provisions can broaden or contract the rights given in a belief or will. This preserves the consumer’s capacity to direct and management the distribution of their property and avoids the dictates of any relevant statute that might require a selected proportion to move to the surviving partner.

Whereas the social gathering on the time of marriage could not have vital property, the appropriate to have a potential partner execute a waiver of statutory rights prematurely of the wedding by way of a prenuptial settlement may very well be a ample foundation to warrant the execution of the settlement. And, the necessity for a lot of these waivers is much more acute in these cases the place the spouses have youngsters from prior relationships that they wish to guarantee are supplied for and additional that the surviving partner can’t disinherit. In some states, even the property held by a belief may very well be topic to the statutory provisions. 

In case your shoppers discover themselves married and didn’t execute a prenuptial settlement, and are within the strategy of property planning, you’ll be able to think about a postnuptial settlement. The postnuptial settlement, at the very least in most states, would require all the disclosures and consent of the events, however then operates equally to a prenuptial settlement.

In case your consumer has not or needs to not execute a pre or put up nuptial settlement, the property planning ought to account for spousal rights inside the property planning paperwork as greatest as attainable. In Florida, there are sturdy legal guidelines pertaining to homestead property. 

If an individual with youngsters dies as sole proprietor of homestead property in Florida, until the homestead rights are waived by a sound settlement, a surviving partner will inherit a life property within the property and the decedent’s youngsters will inherit a the rest curiosity. Any devise on the contrary will likely be invalid.  

The Good, the Unhealthy and the Ugly on Marital Trusts

The Good. In second or third marriages, property attorneys generally draft marital trusts for shoppers trying to devise a few of their property or revenue therefrom to a partner with the rest of the property held for his or her youngsters after the surviving partner dies. This may be an efficient property tax device in addition to a strategy to think about the wants of the consumer’s partner throughout his or her lifetime, however nonetheless have the property in the end move to the youngsters. 

The Unhealthy and Ugly. When marital trusts are created, be it by way of an inter-vivos belief or testamentary belief, for a brand new partner and the rest beneficiaries are the consumer’s youngsters from a previous marriage, there will be unintended penalties. Many marital trusts create animosity and competition between the beneficiaries because the potential for the pursuits of the partner and the youngsters not being aligned is bigger. (The surviving partner and step-parent to the only youngsters of the decedent could also be inclined to make use of as a lot of the marital belief property as she or he can get, whereas leaving little remaining to the rest beneficiaries). In these circumstances, it  is essential for shoppers to rigorously think about the collection of a trustee(s). The Ugly reality is that litigation is at all times a risk with blended households, and having a superb property plan has the potential to reduce litigation among the many beneficiaries. Shoppers ought to think about separating inheritances for his or her family members into separate trusts which can in the end go away much less room for beneficiaries to struggle over.


Elisabeth Salvadore is a Companion at Brinkley Morgan in South Florida who focuses her observe on all areas of Marital and Household Legislation. Salvatore A. Polidoro is an Affiliate at Brinkley Morgan in South Florida who represents high-net-worth people, households, and enterprise house owners in all kinds of advanced taxation and belief and property issues.

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