SYMPOSIUM SPEAKERS – October 20th, Jessica Johnson and Matt Shea

Presentation Scheduled for Monday, 2:10 pm
Anticipated CE: 1 CIMA, 1 MN insurance, 1 CLE Standard
APPROVED CE: 1 CFP, 1 NASBA/CPE, 1 WI insurance
NO CE: ND insurance

When your Clients Are Not the Cleavers: Estate Planning for Non-Traditional Families

"Estate Planning for Non-Traditional Families"

Modern families are complicated. Advisors must be prepared to engage in meaningful dialogue with clients about the many issues they face related to cohabitation, marriage, divorce, remarriage, and stepchildren. These situations can be messy and emotional, but it is far better for clients to address property ownership and estate planning matters with advisors than it is to do nothing. Often, clients start the planning process but do not finish it because the decisions are paralyzing and difficult. The advisor’s role in moving the process forward is critical to meeting the client’s goals and achieving a completed estate and financial plan for the client.

Minnesota law provides by default a prenuptial agreement and an estate plan for every adult resident. If a client does not put into place his or her own plan, the client will be subject to the state’s divorce and property ownership laws, and the client’s estate will follow Minnesota’s intestacy rules. Clients should be aware of the terms of these default arrangements. If those provisions are not what the client wants, the advisor should involve an attorney to prepare documents that meet expectations and reflect the client’s intent.

Typically, prenuptial (and postnuptial) agreements distinguish between marital and non-marital assets, address what happens to assets upon divorce or death, and may designate “separate” property to help protect from a spouse’s creditors or claims by an ex-spouse. These agreements have specific requirements for validity and each party must have separate legal representation. As with most planning, it is best to talk with an attorney earlier rather than later in the process and to avoid a rush agreement just before the wedding.

Minnesota’s intestate succession rules apply when a client dies with probate property but without a will. If all descendants of the client and the client’s surviving spouse are the same (e.g. the biological or adopted children of both), then the surviving spouse will receive 100% of the intestate estate. In other words, if all descendants of the client and the surviving spouse are the same, the children will receive nothing under the intestate succession rules. If there are surviving children from a prior marriage or relationship, the surviving spouse will receive the first $150,000 plus one half of the balance of the intestate estate. Advisors should consider the impact of these rules for a client without a will or revocable trust.

If the client plans ahead and decides to put an estate plan in place, the client should consider whether to leave property to the surviving spouse outright or in a marital trust. The advisor and the client should consider the benefits of a marital trust for the surviving spouse as opposed to leaving property outright to him or her, particularly when the client has been divorced, is considering separating, or is concerned about remarriage of the surviving spouse. A marital trust may provide the client comfort that any assets remaining at the surviving spouse’s death would pass to the client’s own chosen beneficiaries.

For more information, plan to attend the “When Your Clients are Not the Cleavers: Estate Planning for Non-Traditional Families” session presented by Jessica Johnson and Matt Shea at the Symposium 2014 on October 20, 2014.

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