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How Can You Disinherit Someone and Be Sure it Sticks?

Let’s say you want to leave everything you own to your children, but you can’t stand and don’t trust their spouses. That might make you want to delay making an estate plan, because it’s a hard thing to come to terms with, says a recent article “Dealing with disinheritance, spouses” from the Times Herald-Record. There are options, but make the right choice, or your estate could face challenges.

Some people choose to leave nothing at all for their child in the will, so that if there is a divorce or if the child dies, their assets won’t end up in the daughter or son-in-law’s pocket. For some parents, particularly those who are estranged from their children, this can create more problems than it solves.

Disinheriting a child with a will is not always a good idea. If you die with assets in your name only, they go through the court proceeding called probate, when the will is used to guide asset distribution. The law requires that all children, even disinherited ones, are notified that you have died, and that probate is going to occur. The disinherited child can object to the provisions in the will, which can lead to a will contest. Most families engaged in litigation over a will become estranged—even those that weren’t beforehand. The cost of litigation will also take a bite out of the value of your estate.

A common tactic is to leave a small amount of money to the disinherited child in the will and add a no-contest clause in the will. The no-contest clause expressly states that anyone who contests the will loses any right to their inheritance. Here is the problem: the disgruntled child may still object, despite the no contest clause, and invalidate the will by claiming undue influence or incapacity or that the will was not executed properly. If their claims are valid, then they’ll have great satisfaction of undoing your planning.

How can you disinherit a child, and be sure that your plan is going to stand up to challenge?

A trust is better in this case than a will. Not only do trusts avoid probate, but (unless state law requires otherwise at death) the children do not receive notice of the creation of a trust. An inheritance trust, where you leave money to your child, names a trustee to be in charge of the trust and the child is the only beneficiary of the trust. The child might be a co-trustee, but they do not have complete control over the trust. The spouse has no control over the inheritance, and you can also name what happens to the assets in the trust, if the child dies.

This kind of planning is called “controlling from the grave,” but it’s better than not knowing if your child will be able to protect their inheritance from a divorce or from creditors.

With a national divorce rate around fifty percent, it’s hard to tell if the in-law you welcome with an open heart, will one day become a predatory enemy in the future, even after you are gone. The use of trusts can ensure that assets remain in the bloodline and protect your hard work from divorces, lawsuits, creditors and other unexpected events.

Reference: Times Herald-Record (June 6, 2020) “Dealing with disinheritance, spouses”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899

Update Will at These 12 Times in Your Life

Estate planning lawyers hear it all the time—people meaning to update their will, but somehow never getting around to actually getting it done. The only group larger than the ones who mean to “someday,” are the ones who don’t think they ever need to update their documents, says the article “12 Different Times When You Should Update Your Will” from Kiplinger. The problems become abundantly clear when people die, and survivors learn that their will is so out-of-date that it creates a world of problems for a grieving family.

There are some wills that do stand the test of time, but they are far and few between. Families undergo all kinds of changes, and those changes should be reflected in the will. Here are one dozen times in life when wills need to be reviewed:

Welcoming a child to the family. The focus is on naming a guardian and a trustee to oversee their finances. The will should be flexible to accommodate additional children in the future.

Divorce is a possibility. Don’t wait until the divorce is underway to make changes. Do it beforehand. If you die before the divorce is finalized, your spouse will have marital rights to your property. Once you file for divorce, in many states you are not permitted to change your will, until the divorce is finalized. Make no moves here, however, without the advice of your attorney.

Your divorce has been finalized. If you didn’t do it before, update your will now. Don’t neglect updating beneficiaries on life insurance and any other accounts that may have named your ex as a beneficiary.

When your child(ren) marry. You may be able to mitigate the lack of a prenuptial agreement, by creating trusts in your will, so anything you leave your child won’t be considered a marital asset, if his or her marriage goes south.

Your beneficiary has problems with drugs or money. Money left directly to a beneficiary is at risk of being attached by creditors or dissolving into a drug habit. Updating your will to includes trusts that allow a trustee to only distribute funds under optimal circumstances protects your beneficiary and their inheritance.

Named executor or beneficiary dies. Your old will may have a contingency plan for what should happen if a beneficiary or executor dies, but you should probably revisit the plan. If a named executor dies and you don’t update the will, then what happens if the second executor dies?

A young family member grows up. Most people name a parent as their executor, then a spouse or trusted sibling. Two or three decades go by. An adult child may now be ready to take on the task of handling your estate.

New laws go into effect. In recent months, there have been many big changes to the law that impact estate planning, from the SECURE Act to the CARES act. Ask your estate planning attorney every few years, if there have been new laws that are relevant to your estate plan.

An inheritance or a windfall. If you come into a significant amount of money, your tax liability changes. You’ll want to update your will, so you can do efficient tax planning as part of your estate plan.

Can’t find your will? If you can’t find the original will, then you need a new will. Your estate planning attorney will make sure that your new will has language that states revokes all prior wills.

Buying property in another country or moving to another country. Some countries have reciprocity with America. However, transferring property to an heir in one country may be delayed, if the will needs to be probated in another country. Ask your estate planning attorney, if you need wills for each country in which you own property.

Family and friends are enemies. Friends have no rights when it comes to your estate plan. Therefore, if families and friends are fighting, the family member will win. If you suspect that your family may push back to any bequests to friends, consider adding a “No Contest” clause to disinherit family members who try to elbow your friends out of the estate.

Reference: Kiplinger (May 26, 2020) “12 Different Times When You Should Update Your Will”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899

Gray Divorces Changing the Future for Many Senior Americans

Add “gray divorce” to the factors leading to strife in estate planning. Minimizing discord among beneficiaries is one of the top three reasons people decide to have estate plans created, but with more gray divorces, things become complicated.

A survey at the 54^th Annual Heckerling Institute on Estate Planning conducted by TD Bank asked elder law attorneys, insurance advisors, wealth managers and other professionals on the biggest challenge to estate planning. An article in the Clare County Review titled “Rising Gray Divorce Rates Are Making Estate Planning Problems More Complicated” explains the problem, and presents some solutions.

Gray divorce, blended families, naming heirs and changing family structures are making it more complicated—and more necessary—to create an estate plan and review it with an estate planning attorney on a regular basis.

More than a third of the 112 professionals participating in the survey said that gray divorce has the biggest impact on retirement planning and funding. It also impacts naming who becomes a person’s power of attorney and how Social Security benefits are determined.

The biggest way to help avoid family conflict in a gray divorce is the same as in any other divorce: regular communication. The family members need to know what is being planned, including who will be the designated beneficiaries and who will be named as executor.

The divorce process is complicated at any age, but after 50, there are usually more assets involved. The spouse is usually listed as the beneficiary on most, if not all, assets. Each asset document must be changed to reflect the new beneficiaries. Dividing pension plans, IRAs, and other retirement funds entails more work than simply changing names on bank accounts (although that also has to happen).

Wills, trusts, life insurance, and titles on real estate must also be changed. Institutions and companies that have accounts must be contacted, with information updated and verified.

Trusts are growing in popularity as a means of leaving assets to heirs, since they can minimize costs and delays when property is transferred. Trusts make it easier to pass assets, if family conflict is expected.

Even when beneficiaries aren’t expecting any cash assets to be left to them, controversies can still erupt over other assets. Adult children may not care about IRAs or trusts, but often the family home has great sentimental value. Deciding what to do with it can lead to fighting among siblings.

For those considering a gray divorce, talking with an estate planning attorney, in addition to a matrimonial attorney, could make this large life change less stressful. The estate planning attorney will be able to work with the matrimonial attorney, to ensure that estate issues are handled properly.

Reference: Clare County Review (February 10, 2020) “Rising Gray Divorce Rates Are Making Estate Planning Problems More Complicated”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899

Gray Divorces Changing the Future for Many Senior Americans

Add “gray divorce” to the factors leading to strife in estate planning. Minimizing discord among beneficiaries is one of the top three reasons people decide to have estate plans created, but with more gray divorces, things become complicated.

A survey at the 54^th Annual Heckerling Institute on Estate Planning conducted by TD Bank asked elder law attorneys, insurance advisors, wealth managers and other professionals on the biggest challenge to estate planning. An article in the Clare County Review titled “Rising Gray Divorce Rates Are Making Estate Planning Problems More Complicated” explains the problem, and presents some solutions.

Gray divorce, blended families, naming heirs and changing family structures are making it more complicated—and more necessary—to create an estate plan and review it with an estate planning attorney on a regular basis.

More than a third of the 112 professionals participating in the survey said that gray divorce has the biggest impact on retirement planning and funding. It also impacts naming who becomes a person’s power of attorney and how Social Security benefits are determined.

The biggest way to help avoid family conflict in a gray divorce is the same as in any other divorce: regular communication. The family members need to know what is being planned, including who will be the designated beneficiaries and who will be named as executor.

The divorce process is complicated at any age, but after 50, there are usually more assets involved. The spouse is usually listed as the beneficiary on most, if not all, assets. Each asset document must be changed to reflect the new beneficiaries. Dividing pension plans, IRAs, and other retirement funds entails more work than simply changing names on bank accounts (although that also has to happen).

Wills, trusts, life insurance, and titles on real estate must also be changed. Institutions and companies that have accounts must be contacted, with information updated and verified.

Trusts are growing in popularity as a means of leaving assets to heirs, since they can minimize costs and delays when property is transferred. Trusts make it easier to pass assets, if family conflict is expected.

Even when beneficiaries aren’t expecting any cash assets to be left to them, controversies can still erupt over other assets. Adult children may not care about IRAs or trusts, but often the family home has great sentimental value. Deciding what to do with it can lead to fighting among siblings.

For those considering a gray divorce, talking with an estate planning attorney, in addition to a matrimonial attorney, could make this large life change less stressful. The estate planning attorney will be able to work with the matrimonial attorney, to ensure that estate issues are handled properly.

Reference: Clare County Review (February 10, 2020) “Rising Gray Divorce Rates Are Making Estate Planning Problems More Complicated”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899

Extra Social Security Benefits for Divorced People

According to the Social Security Administration, as many as 21% of married couples depend upon their Social Security checks for at least 90% of their retirement income. The same is true for almost half of all single beneficiaries. Therefore, if you are expecting Social Security to make up the larger share of your income during retirement, don’t overlook any possible additional benefits, says the article “Divorced? You could Be Owed Extra Social Security Benefits” from The Motley Fool.

People who have been divorced may have more due them than they expect.

A married person may be eligible to receive Social Security benefits based on their spouse’s work record, even if they themselves have never worked. However, divorced people are sometimes entitled to benefits based on their ex-spouse’s records, depending upon their situation.

There are a few eligibility requirements. For starters, the marriage must have lasted at least ten years. Second, you can’t have remarried—although if your ex has remarried, this won’t affect your ability to claim based on their record. Finally, the amount received in benefits based on your own work history must be less than the amount that you’d receive in divorce benefits, based on your spouse’s record.

You’ll also need to be at least 62 to start claiming benefits, and in most cases, your ex needs to have started taking benefits before you can receive monthly benefits. There is an exception: you have been divorced for at least 24 continuous months and your spouse is eligible to receive benefits, but just hasn’t started claiming them yet.

Note that you won’t receive the full benefit amount for regular Social Security benefits or those based on your ex’s work history until you claim at your full retirement age (FRA), which is 66, 66 plus a few months or 67, depending upon your birth year. Claim earlier than that, and benefit checks will be smaller, as they would be if you were claiming your own benefits before FRA.

If you are indeed eligible to collect divorce benefits, you may be able to collect additional benefits based on the ex-spouse’s record on top of your own benefits. You won’t get both. However, what you may get is your own benefits, plus a portion—up to 50%—of the amount your ex-spouse is eligible for, if you claim at his or her FRA.

Let’s say you’re receiving $800 a month based on your work record at your FRA. Your ex is eligible to receive $2,000 at her FRA. If you meet all the right requirements, you could collect 50% of her benefits in addition to yours. You could receive $1,000 a month: your $800 and an additional $200 in divorce benefits.

Bear in mind that Social Security is a big government organization, and likely will not make this type of adjustment on your behalf. You’ll have to advocate for yourself, filing for the benefits you believe you deserve and you may need to make more than a few phone calls. However, the additional income would be well worth it.

Reference: The Motley Fool (Jan. 30, 2020) “Divorced? You could Be Owed Extra Social Security Benefits,”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899

Why Should I Continue to Have Life Insurance After My Divorce?

Life insurance needs to be addressed during the process of a divorce. If there are children, the beneficiary may continue to be the ex-spouse, if they are going to be the person raising the children if the key breadwinner dies. But there are alternatives.

Investopedia’s article, “How Life Insurance Works in a Divorce,” explains that addressing life insurance is a critical issue in the divorce process, especially for divorcing couples with children. Maintaining life insurance protects the financial interests of both parties and their dependent children. This involves making the necessary beneficiary changes, accounting for the cash value in whole or universal life policies, protecting child support and alimony income, and—most importantly—making certain that any children involved are financially protected.

Most married couples with life insurance list their spouse as the primary beneficiary. Life insurance protects a family from financial devastation, if you die and your income is lost. For a married person, naming your spouse as your beneficiary makes certain that he or she can continue to pay the mortgage, put food on the table and possibly bring up the children without your income. Life insurance is especially critical, if you provide the majority of the income.

In a divorce, especially an acrimonious one, odds are good that you’ll no longer want your ex-spouse profiting from your death. If there are no children are involved, most life insurance policies let you change the beneficiary at any time.

Some life insurance policies, such as many whole life and universal life policies, accumulate cash value over time. Each month when you make your premium payment, some of the money is deposited into a fund that grows with interest. This is the policy's cash value, and it’s your money. Any time while the policy is active, you can forgo the death benefit and take the cash value. This is called “cashing out” your life insurance policy.

Since the cash value from a life insurance policy is part of your net worth, you should list the policy, including its cash value, as a marital asset to be divided. Frequently, when marital assets are divided evenly, half the cash value from the policy goes to each spouse.

Protecting child support or alimony income is really important for the spouse who takes primary custody of the children after the divorce. These child support funds are for feeding and clothing the children and saving for college. If the noncustodial parent isn’t around anymore, this income goes away and it could put the custodial parent in a bind. If you have custody of the children, the best way to protect yourself from this situation, is to keep a life insurance policy on your ex-spouse with a benefit amount high enough to replace your child support or alimony income at least until the last child is 18. Being the custodial parent, if your ex is irresponsible or untrustworthy, you may just purchase the policy and pay the premium yourself, since coverage stops if payments lapse.

A life insurance policy becomes more important, if an ex-spouse is no longer involved with the children and if the custodial parent is the only source of income for the family. There should be a guardian named in your estate plan and another person named to handle finances on your children’s behalf. Estate planning and life insurance are both important to protect children, when there is a divorce.

Reference: Investopedia (June 25, 2019) “How Life Insurance Works in a Divorce”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899

Why Divorcing Couples are Increasing Looking at ADR and Mediation

If a couple can remove all or most of the emotional animosity from their negotiations, they have an option of using alternative dispute resolution, also known as ADR, in place of litigation. Issues such as the division of marital property, child support, alimony, custody arrangements and other matters can be resolved without the high-strung drama of litigation or threats of a courtroom battle. Mediation is another means of divorcing minus litigation.

The Philly Voice’s recent article, “Why divorcing couples are choosing alternative dispute resolution over litigation” explains that these approaches are more flexible, faster and less expensive than litigation. Obviously, prior to any action, talk to an attorney.

Mediation lets the parties work through the issues in a more informal setting. However, this requires open communication, candor and a willingness to compromise. Arbitration is more formal and still allows the parties to streamline the decisionmaker’s role, allowing a faster resolution than a trial.

In mediation, the two parties to the divorce select a mediator who supervises direct negotiation. Parties may appear with or without a lawyer. The mediator guides the parties to reach a resolution. Mediation works best when the parties can talk openly or are willing to be conciliatory. It can even help to establish the basis of the post-dissolution relationship. When an agreement is reached, a written Memorandum of Understanding is prepared by the mediator. You can talk to you own attorney to assist in finalizing a formal written agreement.

Mediation allows for very customized solutions, since the negotiation isn’t bound by statute or case law, as it would be in litigation. Select a mediator who is professional, patient, a good communicator and experienced in these matters. The parties must develop trust with the mediator, so they can candidly talk about the needs and concerns in settling their divorce.

Arbitration lets divorcing spouses determine how formal or informal a process to use. It also has the advantage of confidentiality. However, unlike mediation, arbitration is more like litigation. The parties choose an arbitrator and work with their own counsel to prepare for a hearing. Just like a trial, each side presents documents, witnesses and makes arguments. The arbitrator then makes decisions concerning the divorce, applying the law to the specific facts. Note that an arbitrator’s decisions are final and typically not reviewable by a court.

Divorces can take several years to travel through the courts, and trials are public hearings. The parties also have no say regarding which judge is assigned to the case. The litigation process can drag on, and it can be stressful and expensive, and the results can be unfavorable or unexpected. Trials are also long and tedious.

For the wave of gray divorces that are becoming prevalent among seniors, a mediated or ADR divorce is a wise way to respectfully untangle a marriage of many years. In the process, speak with your estate planning attorney, as a number of issues addressed during the divorce process will undoubtedly impact the estate plan for both spouses.

Reference: Philly Voice (September 12, 2019) “Why divorcing couples are choosing alternative dispute resolution over litigation”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899

Will a Divorce Protect My Spouse from My Medical Debt After I Die?

The high cost of health care for one spouse could leave the surviving spouse facing a mountain of medical bills. Would it make sense to divorce, so that your spouse isn’t burdened with debt? There is no one answer, and many concerns, like fraud.

nj.com’s article asks “Will getting a divorce protect my spouse from my medical debt when I’m dead?” According to the article, the factors to consider include details on the couple’s assets, income and debts, the existence of a will and/or other estate planning documents and the amount and nature of the medical expenses.

There are a few medical expenses of a deceased spouse, for which the other spouse may be liable. The nature of the medical debt is relevant, in addition to the amount, in the Garden State.

In addition, whether the would-be deceased spouse has a will and the extent of his or her estate is also an important factor. If the estate assets are insufficient to pay all debts of the estate in full, it is possible that medical debt may not be paid at all. For example, New Jersey’s applicable statute—N.J.S. 3B:22-2—states the debts in order of priority to be repaid when the estate assets are not enough to pay all claims in full:

• Reasonable funeral expenses;
• Costs and expenses of administration;
• Debts for the reasonable value of services rendered to the decedent by the Office of the Public Guardian for Elderly Adults;
• Debts and taxes with preference under federal law or the laws of New Jersey;
• Reasonable medical and hospital expenses of the last illness of the decedent, including compensation of persons attending him;
• Judgments entered against the decedent according to the priorities of their entries respectively; and then,
• All other claims.

An estate planning attorney who practices elder law and Medicaid planning will be able to help you navigate the cost of care and applying for Medicaid. Getting a divorce solely for the purpose of avoiding paying debt may be considered fraud, so you’ll want to be sure that you are not doing something legally and ethically wrong. Speak with an experienced estate planning attorney, who can guide you through this difficult area.

Reference: nj.com (May 16, 2019) “Will getting a divorce protect my spouse from my medical debt when I’m dead?”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899

Should You Add a “Baby-Nup” to Your Estate Planning Documents?

Social changes always spark debate, and changes in parenting are no exception. The discussion of whether soon-to-be parents need to map out their parenting journey with a baby-nup has many on both sides of the argument all fired up.

MSN’s article, “Would you sign a 'baby-nup'? New trend sees expectant parents drawing up contracts to agree how they'll divide childcare and chores,” explains that the concept involves signing an agreement to split up chores fairly between the two parents before the child is born and agree on custody arrangements, if the couple winds up divorcing.

Parade magazine interviewed a couple, Julie Hochheiser Ilkovich and Daniel Ilkovich, who had a series of meetings ahead of their daughter's birth to detail some of the tasks in their future.

They decided “what they wanted to try to keep about their lives (date nights, gym time, etc.) and how they would make it all work, including who would also handle chores, as well as day-to-day things like pediatrician appointments and Amazon orders.” After two years, every morning and every evening is designated to one or the other parent.

Some on social media were quick to say it seemed like a great idea. Another commented “It sounds good in theory. However, many circumstances could change, by the time you have a baby or get divorced.”

Others said that parenting should be done equally without the need for a contract stipulating the conditions. As a result, there doesn’t need to be a document to divide up responsibilities.

Another commented: “Oh for goodness sake!! Babies are really not that difficult, if you're doing it right!”

Other parents were quick to point out that it's difficult to predict the realities of parenthood, until after the child is born. The responsibilities were often unequal at times.

One person said that until you've lived it, it's hard to know who will need extra support and that sometimes one partner will need to carry the other.

Another writer added, “It's called being a parent. Either embrace every good, bad, wonderful and annoying thing that comes with it, or don't have kids.”

If you consider a ‘baby-nup’ in the same conversation as you do a pre-nup, you might want to do so while you are having your estate plan prepared. All new parents should be sure to have an estate plan in place to protect each other and their children. Your last will and testament includes information about who you would want to raise your children, if something should happen to both parents. That is more important than a heated discussion about who has Thursday nights off from parenting. Speak with an estate planning attorney to create a plan for your new family.

Reference: MSN (April 29, 2019) “Would you sign a 'baby-nup'? New trend sees expectant parents drawing up contracts to agree how they'll divide childcare and chores”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899

Divorce and Your Estate Plan: Don’t Make Mistakes Here

What would happen if your soon-to-be ex-spouse became very sick or died during divorce proceedings? If his or her estate plan wasn’t updated, you could be the one making health care decisions or inheriting everything. That’s why the recent article, “5 Estate Planning Moves If You Are Getting Divorced” from the Journal Enterprise, says not to forget about getting your estate plan updated.

Medical Power of Attorney. This is also called a healthcare proxy. This person is named to make decisions on your medical care, if you’re ill or injured and can’t state your medical care decisions. Unless you make the change, your ex-spouse will have this right.

Financial Power of Attorney. Like a healthcare proxy, this is someone you select to take charge, if you become incapacitated. This person has authority over your financial decisions, and it means they have the authority to pay your bills, access your bank and investment accounts, collect and cash your paychecks and make financial decisions for you. You want to be certain that your assets are protected, and your financial obligations are met, while you’re unable to act on your own behalf. Most people name a spouse, but if you get divorced and don’t switch this designation, your spouse will still be your financial power of attorney and will retain access to your finances.

Create a List of Things to Change After Your Divorce. A divorce can freeze some assets and accounts, which remains in effect until it’s finalized. Therefore, you won’t be able to change the beneficiary on life insurance policies, pensions and other types of accounts. Ask your estate planning attorney to find out exactly what accounts will be affected. Once you know which ones are frozen, you should make a list to ensure you won’t neglect to change them, when the divorce is finalized.

Modify Your Will. In some states, you may not be permitted to create a new will, but your attorney should still be able to help you make the necessary changes. You’ll want to review your heirs. If you do have minor children and you have sole custody, you may want to designate another person as their guardian. If you named your spouse as executor of your will, you may want to consider changing that.

Modify Your Trust. You may have a revocable living trust, in addition to a will. One of the advantages of a revocable trust is that it doesn’t go through probate, so your heirs get a bigger inheritance more quickly. If you have a revocable trust, talk to your attorney about changing it after your divorce.

Divorce is an overwhelming process, and one that feels like it will take forever. You might feel like estate planning is the last thing you want to deal with, but it may be wisest to make it one of the early tasks in the process.

Reference: Journal Enterprise (March 20, 2019) “5 Estate Planning Moves If You Are Getting Divorced”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899