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Business Plan early to avoid conflict with the stepkids
by Attorney Mark Andersen, Dana Law Firm When parents start dating after a divorce or after the death of a spouse, confl icts between a step-parent and their stepchildren are a natural part of the equation. By getting married in their later years, a parent generally feels that the marriage will add to their quality of life, while a child often feels that their relationship with the parent, and possibly their inheritance, are threatened. In an ironic twist of fate, adult children often will second-guess their parents’ choice of dating partners. Adult children often will ask questions such as: “Isn’t he too old for you, Mom?” or “Doesn’t she just want your money, Dad?” One obvious question, that no one wants to articulate at the risk of sounding crass, is: “If you marry, what happens to your assets, both while you’re living and when you die?”
Because of the social stigma of questions that relate to a person’s money and death, adult children usually are left out of the loop on fi nancial and estate planning matters. The new couple is fi rmly entrenched in each other’s daily activities and fi nances. The kids are on the outside looking in when the newlyweds restate their estate plans and make changes to their fi nances and distributions of property. The adult children often perceive that it will be easier to attempt to alienate the fi ancé or spouse, rather than broaching these diffi cult subjects. In the beloved fairy tale “Cinderella,” her stepmother inherited and subsequently squandered the family estate. All the while, Cinderella played the role of the dutiful stepdaughter. Fortunately for Cinderella, justice was done when Prince Charming made her his queen, and made the stepmother a palace servant.
In reality, it is all too common for children or a new spouse to be disinherited unintentionally, and it
is all too easy to take actions that have a legal effect that is the complete opposite to the intended use and distribution of a person’s assets. In fact, the legal effect of a marriage causes very signifi cant changes to the disposition of a person’s property. See Arizona Revised Statutes Section 14-2301 regarding a premarital will as an example. Even a routine deposit of a paycheck, payment of expenses, or addition of a joint owner to bank accounts, can have a dramatic effect on the nature of property and the distribution of property under a person’s estate plan. Below is a list of steps that responsible parents should consider to preserve the relationship between the parent’s children and new spouse and to ensure that their testamentary wishes are observed upon death. Due to the complexities and formalities involved, and because each person’s situation and wishes are different, it is imperative that the parents obtain legal counsel before changing any aspect of their fi nances and defi nitely one to two months before the marriage occurs.
Reaffi rmation or restatement of estate planning documents: Either during the engagement or after the marriage occurs, it is critical that the spouses reaffi rm or restate their estate plans. Failure to do so may result in partial or complete failure of the testamentary wishes of the new spouses and of their estate planning documents in effect at the time of the marriage. Prenuptial agreement: For those who are young and in love, or “not so young” and in love, any mention of a prenuptial agreement may dampen the passion of a budding relationship. Many people erroneously categorize a prenuptial agreement as a “divorce plan,” and no one wants to think about divorce before they’re even married. Even with divorces becoming more and
more common, death is much more certain, although the timing is not. A well-drafted prenuptial agreement will set forth the expectations of the husband, wife and the children, whether the marriage ends due to divorce or death. The prenuptial agreement will provide clarity with regard to the character of property as community or separate property, the amount of alimony, rights to certain statutory allowances and retirement benefi ts, and the burdens of income taxes, property taxes, and estate taxes. Additionally, it will give guidance to third parties in the event that one spouse becomes incapacitated with regard to expenses that are intended to be joint, as opposed to the expenses that should be borne exclusively by one spouse.
The Dana Law Firm, with offices in seven Arizona cities, has a new office in Chandler at 1300 N. McClintock, Suite B-4. For contact information, visit
www.danafirm.com.
October 2 - 15, 2010
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This Dana Law Firm article continues online. For more ways to plan an estate, including property agreements, trusts, how to set up an independent fiduciary and provisions for the surviving spouse, visit
www.SanTanSun.com and click on Business.
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