Aaron Charles Gregg

How Do I Reduce My Blended Family Fighting Concerning My Estate Plan?

“Even a close family can have quarrels and confrontations, but these conflicts tend to be more prominent within a blended family.”

The IRS recently announced that in 2020, the first $11.58 million of a taxable estate is free from federal estate taxes. Therefore, a vast majority of estates won’t have to pay federal estate taxes. However, a TD Wealth survey at the 53rd Annual Heckerling Institute on Estate Planning found that family conflict was identified as the leading threat to estate planning.

Investment News’ recent article, “Reducing potential family conflicts,” explains that a blended family can result from multiple marriages, children from a current or former marriage, or children involved in multiple marriages. There are more "blended families" in the U.S. than ever before. More fighting over estate planning occurs in blended families.

The key element in any conflict resolution is open and honest communication. It’s especially the case, when it involves a blended family. In many instances, it’s best to explain a proposed estate plan to the family in advance.

If anyone objects, listen to their point of view and try to be empathetic to their position. You may wind up with a compromise, or, if no changes are made, at least the family member had an opportunity to air their grievances.

One potential solution to minimize conflicts within a blended family may be a prenuptial agreement. The agreement is signed prior to the marriage and outlines the financial rights of each spouse, in the event of a divorce or death. Prenups are particularly useful in second marriages, especially when there is a disparity in age and wealth between the parties.

However, not every married couple in a blended family has a prenuptial agreement. Even if they do, blended families can still have family conflicts in estate planning.

It is important to remember communication, reducing the chances of a will contest with a “no-contest” clause, asking your attorney about a revocable living trust and compromise

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Estate planning can be particularly difficult for blended families. Talk with an experienced estate planning attorney about the techniques that can help reduce potential family conflicts.

Reference: Investment News (December 9, 2019) “Reducing potential family conflicts”

What Should I Keep in Mind, When I Remarry?

“When you remarry, you're not only combining residences with your new spouse, you're also merging your finances. If you have children, it may involve some financial-related stress. For instance, you might need to factor in child support payments or consider whether your new marriage will impact your children's inheritance.”
Before you remarry, discuss any past financial issues with your fiancé, and plan for success, by considering some important ideas.
U.S. News & World Report’s recent article, “6 Financial Considerations for Remarriage,” lists six financial considerations and crucial steps to take before you remarry:
1. Revise Your Budget. Whether this is your first, second, or third marriage, couples need to create a budget for daily spending, monthly expenses and big-ticket purchases. You should also talk about your household expenses and costs related to children from a prior marriage. If you have to pay alimony, let your new spouse know. It’s also a good time to talk about credit card debt, past investments you've made and retirement accounts. You may want to draft a prenuptial agreement.
2. Inform your Fiancé of Any Financial Obligations, Including Child Support. Before getting married, review the laws to see how child support may be impacted by marriage to a new person. While it's unlikely that you would lose your child support if you remarry, the family court may reduce the amount. If a person paying the child support is remarrying, they should talk to their partner prior to the marriage to make certain they understand the amount of the payments.
3. Check Insurance and Benefits. A frequent mistake when remarrying, is not updating the beneficiaries of life insurance policies. You also may have to look at other updates to your coverage, like who will be on your health plan, and you may need to modify your homeowner’s insurance with a spouse and children in residence. Understand that if you get government benefits, like Medicaid or Social Security, you could forfeit your Medicaid eligibility when you remarry if your spouse's income is too high to be eligible. You might also discover that your Social Security benefits from an ex-spouse will stop, after you remarry.
A second marriage may also increase a parent's income for federal financial aid purposes for college. If a parent is the custodial parent for the FAFSA (Free Application for Federal Student Aid), their income now may include their new spouse's income. It is important to discuss saving for college and tuition costs, as well as if either partner has children from a prior marriage, whether each spouse will save money for tuition costs.
5. Estate Planning Is Critical. Check your estate planning before remarrying. That includes a will, medical powers of attorney, do not resuscitate orders, durable powers of attorney, designations of guardianship or consent to adoption and various trusts, including trusts for special needs children. If you have children from a prior relationship, hire a qualified estate planning attorney.
6. Create an Inheritance Plan. If you have children from a prior relationship, you need to put the right estate planning documents in place to protect them from being disinherited. In some states, a last will and testament may be enough, but in others it may make sense to also have a revocable living trust.
The biggest mistake that couples commit when entering their second marriage, is thinking that their own children will inherit any of their estate, if they die first. Perhaps the adult children will inherit some of the estate, but you should speak to an estate attorney to create a customized strategic plan. In many instances, the living spouse will change the plan and leave everything to their children and nothing to yours.
Reference: U.S. News & World Report (November 18, 2019) “6 Financial Considerations for Remarriage”

Did Wendy Williams Have a Prenup?

“Wendy Williams couldn’t help but be honest with Andy Cohen on the Sunday, September 8, episode of Watch What Happens Live after a fan asked her if she would ever get a prenuptial agreement, if she remarries again.”
“Abso-effing-lutely,” the 55-year-old Wendy Williams said with a laugh, when asked if she’d ever get a prenuptial agreement, if she remarries.
In Touch’s recent article, “Wendy Williams Tells Andy Cohen She Will Get a Prenup If She Ever Remarries on ‘WWHL,’” says that the Wendy Williams Show host filed for divorce from her estranged husband, Kevin Hunter, in April after more than 21 years of marriage. She said the couple didn’t have a prenup in place.
A prenuptial agreement (also called a "prenup" for short) is a written agreement created by two people before they get married. A prenup usually makes a list of all the property each person owns, along with any debts. A prenup states what each person's property rights will be, if the marriage ends in divorce.
“I didn’t think it would end, first of all, and second of all, that is not sexy to introduce paperwork when you are in love with somebody,” Wendy said during an appearance on SiriusXM’s “Sway in the Morning” at the time. “But, as a grown person, I’d get with another grown person and that grown person would have a thriving career. I would choose differently this time.”
Wendy told Andy Cohen that she was back on the market, and that she’s been seeing other people, including a doctor in his 50s. The Bravo personality, Cohen, asked the DWTS alum if she was still seeing a mystery man.
“I see many men,” she said.
Andy continued to ask the New Jersey native more questions about her dating life, in which Wendy told him that her ideal guy would be between the ages of 48 and 65 and must be at least 5-foot-8. She also admitted that she still speaks with Kevin, because they share 19-year-old son, Kevin Jr. This is despite the fact that he cheated on her with his mistress Sharina Hudson and got her pregnant.
“I mean, he messed up,” she said. “But, you know, hey, life moves on.”
However, it seems like Wendy is doing just fine now.
“I really like the new me,” the Emmy nominee confessed. “I don’t know who I’ve become, but I like her. She’s smart, she’s strong, she makes good choices.”
Reference: In Touch (September 9, 2019) “Wendy Williams Tells Andy Cohen She Will Get a Prenup If She Ever Remarries on ‘WWHL’”

What Are Some Smart Second Marriage Planning Tips?

“One in five Americans has married at least twice. However, a sobering 60% of second marriages end in divorce, the Census Bureau found.”

Forbes’s recent article, “6 Second Marriage Planning Tips For You And Your Significant Other Before Walking Down The Aisle,” says it’s wise to provide some reality into your romance.

This begins with practicing good communication, a trait that is needed to help any marriage succeed.

You should begin this conversation well before setting a date to say, “I do.” Let’s look at some tips for making sure your next marriage gets off on the right financial foot:

Be open. This means frank talk about your plans and obligations to any children and former spouses. Talk about your credit history, assets, debts and any financial support you must provide.

Look at your property. Review the assets that each of you will bring into the marriage and how they ultimately will be used or bequeathed.

Update your accounts. Be sure that all your records are up to date when you remarry.

Sign a prenup. This isn’t just to protect the assets of the wealthier spouse. It can be important if you both already have established careers, children or significant assets. A prenup lets you decide together and in advance, which assets you’ll share and those to keep separate, in case you divorce.

Work with an experienced estate planning attorney. He or she will help you retitle your investments, update your accounts and modify any beneficiaries on retirement, life insurance and annuity accounts. Since the probate laws aren’t typically designed for blended families, also be sure you create an estate plan, especially if you or your new spouse have children and grandchildren from previous marriages.

Without an estate plan, most probate laws stipulate that your assets will pass to your current spouse and then to his or her children, if you die first.

That’s a great recipe for feuding, bitter feelings and big legal expenses among your survivors.

Reference: Forbes (June 20, 2019) “6 Second Marriage Planning Tips For You And Your Significant Other Before Walking Down The Aisle”

Did Actor Robert De Niro have a Pre-Nup?

“She claims the revised documents make her a 50% partner in all his post-marital success. Massive projects hang in the balance. That’s the way Grace Hightower is evidently handling her second divorce from Robert De Niro, who hates publicity and has too much going on to suffer delays.”

Wealth Advisor’s recent article, “Robert De Niro Prenup Breakdown Can Rock NYC Real Estate (And $500M Dynasty),” says that Oscar-winning actor Robert DeNiro is estimated to be worth $300 million and with a $400 million Queens real estate development partnership with his broker son Raphael, there’s plenty more money.

Grace has been with De Niro one way or another since 1987. They were married 10 years later and almost split in 1999, only to reconcile five years later.

A big issue in the divorce is the lack of a firm prenuptial contract protecting DeNiro’s fortune.

When the couple got back together, the terms were that she would get $500,000 in cash, along with what it would take to buy her out of the marital home. She’d also get an apartment, then valued at $6 million, as well as $1 million a year in upkeep. However, unfortunately for De Niro, the contact also apparently confirmed in writing that everything he made beyond that was a partnership, 50-50.

A good prenuptial contract should be reviewed, just like an estate plan. If it’s out of date, it should be modified to something more current and defensible. The actor may have only been worth $100 million then. Now that he’s at easily triple that net worth, the numbers no longer add up the same way.

Meanwhile, he’s in deep trying to renovate an entire neighborhood of Astoria into a Hollywood-style film production hub. Purchasing the land is costing close to $75 million.

It’s not all his money. His son Raphael (from a previous marriage) is a high-powered real estate broker lining up venture investors and adding his own funds to the project.

If Grace wants $50 million or even $10 million now, DeNiro and his son could have a problem. He may have to allow Grace to participate in the new project, instead of cash.

If not, he’ll have to borrow or liquidate properties to come up with cash.

A good prenup would have avoided all of this.

Reference: Wealth Advisor (June 24, 2019) “Robert De Niro Prenup Breakdown Can Rock NYC Real Estate (And $500M Dynasty)”

How Do I Plan My Estate When Entering into a Second Marriage?

“How to plan for your estate when you're entering into a second marriage.”

Estate planning for spouses with children from a prior relationship can be difficult, as explained in an article from nj.com in the article “When you have kids, who should get inheritance from second marriage?” For example, if your new spouse leaves all of his assets to you outright, there’s no guarantee that his children will ever receive a dime. Even if you execute a will that gives his children an inheritance when you die, you could change the will at any time after your husband's death. The new will could cut his children out and leave everything to someone else, like your own kids. They could be children with the deceased spouse, or from a prior or later relationship, or a new spouse.

This can be a dilemma for the husband in this case. First, let’s look at whether he can unilaterally cut the new wife out of his will. As with most legal issues, the answer depends. However, New Jersey does have some laws to protect spouses from this situation.

In that state, the new wife may be able to claim an elective share. This entitles a surviving spouse to a third of the deceased spouse's estate—even if the deceased's will states that the survivor gets nothing. But this law is needs-based, so if she has her own property, either acquired independently or inherited from her spouse (including life insurance benefits) that’s more than the elective share amount, then she won’t be entitled to anything beyond what is provided under the will. That could be nothing.

New Jersey also has a law concerning an "omitted spouse." If your spouse executed a will before the marriage that leaves everything to his children but has no provisions for a future spouse, then the new wife would be entitled to a share of the deceased spouse's estate under the state’s intestacy laws. Those laws typically only apply, when someone dies without a will.  However, they would also apply in this situation. In that case, the new wife would be entitled to more than 50% of the husband's estate and his children would inherit the rest.

The husband has several ways to address the situation. The simplest is to leave some of his estate to the new wife and a portion to his children. Another solution is for the husband to include a trust for the new wife’s benefit in his will. This spousal trust would provide her with all of the income from the trust, as well as principal distributions necessary for her health, education, maintenance, and support, known as the ascertainable standard. She’s entitled to principal distributions to keep her standard of living at the same level it was before the husband's death. Anything left in the trust when she passes away, would go to the step-children. This trust typically includes the couple's home, so that the surviving spouse can stay there so long as she lives. The home can also be addressed by granting the survivor spouse a life estate deed.

A prenuptial agreement is another way to provide for step-children, especially when one or both spouses is wealthy.

Consult with an estate planning attorney to discuss these options. It's wise to begin before you get married. You and your spouse should examine the situation from both sides, so that you fully understand the others' feelings and goals.

Reference: nj.com (September 6, 2018) “When you have kids, who should get inheritance from second marriage?”

Why is There a Gender Gap in Financial Knowledge?

“A review of research from over the last six years, points to a persistent gender gap in both financial and investment understanding.”

A review of research from over the last six years points to a persistent gender gap in both financial and investment understanding, according to a recent article by the Financial Industry Regulatory Authority (FINRA) Investor Education Foundation.

A recent article from WTOP, “12 reasons women need to close the financial literacy gap,” notes that “women consistently score lower than men on financial literacy measures, and this gender-based gap may negatively impact women’s long-term financial well-being.” This research was based on data from the foundation’s National Financial Capability Study (NFCS), which asked five basic financial literacy questions and tabulated the answering success of women versus men. The results showed that both millennial and older women underperformed men in answering these basic questions.

The study also found that women are more likely to answer that they “don’t know” to these questions. On average, between 25-36% of the time, women say they don’t know the answer to a question. One possible explanation for this comes from research results showing that men are more likely to be offered financial education. Men are more likely to be employed full-time, and financial education is frequently provided in the workplace.

These lower levels of financial literacy among women, may keep them from accumulating and managing assets, which ultimately leads to securing a less than promising financial future. Sometimes the financial literacy gap occurs from a person’s life circumstances. For instance, when a woman is married, she’ll usually share financial accounts and decision-making with her spouse. With a partner who’s more educated in financial matters, it’s understandable (and often common) for a woman to accept or ignore her own financial education gaps. Here are some of the reasons why women should pay attention to their money:

To close the wage gap. 2017 research shows that women are paid about 82 cents for each dollar a man makes. That means a woman must work four more months per year to make the same annual salary as a man.  However, among millennials, women are significantly closer to pay equality.

It enables women to care for loved ones. Women are frequently the primary caregivers for extended family. Research shows that the average caregiver is a 49-year-old female providing 24-hours-per-week of care for four years to a 69-year-old female relative. Giving that kind of care often leads to women leaving the workforce sooner than men. As a result, their retirement savings and other potential wealth-building options are more likely to be decreased by a parent or other family member’s unexpected need for care.

Funding charitable causes. Women have different goals for their investment portfolios, and women are usually more goal-oriented. They center more on how their money can be used to meet their life goals, like helping loved ones or giving back to charity. Being smart about how they give to others, enables women to give in a tax-efficient manner and can leverage their charitable-giving dollars.

Beneficiaries can be changed. In a second marriage, there can be challenges that come from the competing need for assets for an aging woman and the desire to leave assets for children from a prior marriage. While receiving a life estate in a home, a life insurance death benefit or a share of retirement accounts can help secure a surviving woman’s future, they’re usually insufficient and not permanent answers, because the owner of these assets has the ability to change his or her mind. They don’t have to give any reason for making a change in beneficiary, and depending on the type of account or insurance, may not have to give any notice. Be proactive and set up legal obligations via a prenuptial or postnuptial agreement, an irrevocable provision in an estate plan, or by being the owner of a life insurance policy written on a spouse’s life.

Women live longer. The average male life expectancy is about 76½ years, and a woman’s is a little over 81 years, according to research by the World Health Organization and Imperial College of London. This is one of many reasons that women ages 75 and older are almost twice as likely to live in poverty compared with men of the same age. One of the biggest financial risks as we age, is the cost of health care. By the time a woman reaches 75, there’s a 70% chance she’ll require assisted care at some point during her life. Rising health care costs and long-term care costs increasing at a rate greater than inflation, make it imperative that women engage in advanced planning.

Reference: WTOP (September 5, 2018) “12 reasons women need to close the financial literacy gap”

Why Do We Need a Prenuptial Agreement?

“Prenuptial agreements allow individuals to protect themselves financially with a prearranged, legally binding agreement between spouses. It can designate certain current and future assets as individually owned (i.e. separate), rather than marital property that can be subject to division upon divorce.”

While most couples are optimistic about their marriage, statistics show that about half of all marriages in the U.S. end in divorce.

Forbes’ recent article, “Pre-Nuptial Agreements: A Hedge For Happily Ever After,” notes that for young couples, the financial future may be uncertain. Without significant family money, young couples may be more hesitant to have this type of discussion.

Although there are two types of laws dealing with the ownership of marital property (common law and community property), typically if one spouse enters a marriage with significant assets and would like to keep these assets separate, a prenuptial agreement can provide him or her with protection, if the marriage ends in divorce.

For example, although inherited assets have traditionally been considered separate assets, these assets can easily become marital property. It’s possible for these inherited assets to remain as separate property through careful segregation. It’s also common for a couple to unintentionally comingle these assets, making them marital assets.

Depositing inherited assets into a joint account or using separate assets to purchase a jointly owned residence that benefits both spouses, are frequently seen examples of comingling that can create marital property. Even when a couple attempts to keep assets separate, depending on state law, an inheritance (or the appreciation) may still become marital property.

In some instances, a trust with a prenuptial agreement may give a person the best protection against the inadvertent conversion of separate property into marital property.

Prenuptial agreements can be quite important to protect children in high-net worth families. These agreements create a clear structure that will help to avoid uncertainty of a divorce settlement and make certain that the intended beneficiaries receive the appropriate family assets.

While the subject of prenuptial agreements isn’t romantic, having the conversation may be necessary and pragmatic.

In cases of family or personal wealth and children from prior marriages, the conversation may be critically important.

Reference: Forbes (July 30, 2018) “Pre-Nuptial Agreements: A Hedge For Happily Ever After”

Queen Insisted that Meghan Markle Sign a Prenup

“According to palace insiders, Queen Elizabeth was adamant that the 36-year-old Duchess of Sussex sign a prenuptial agreement before she married Prince Harry, in order to protect his $500 million fortune.”

People all over the globe watched the festivities as American actress Meghan Markle and Prince Harry said their “I do’s” at Windsor Castle near London, England on May 19.

Everyone acknowledges it was the wedding of the year, but now word is out that the groom’s grandmother, Queen Elizabeth was thinking about estate planning, as well as how the bride would look on her special day.

Yahoo’s report, “The Queen 'asked Meghan to sign a $500m prenup' before marrying Prince Harry,” noted that according to palace insiders, Queen Elizabeth insisted that the 36-year-old Duchess of Sussex sign a prenuptial agreement, before she married Prince Harry. This was to protect his $500 million fortune.

Meghan starred on the USA Network series, Suits, for many years, before falling in love with the 33-year-old Prince. She’s said to have been “only too happy” to sign the prenuptial agreement.

Meghan’s only request was that she didn’t want the Queen to discuss it with any other senior royals, like Charles and William. She wanted it confidential.

A prenuptial agreement (or "prenup" for short) is a written contract signed by the bride and groom before they’re married. This agreement typically lists all of the property each person owns (as well as any debts) and details what each person's property rights will be, if the marriage ends in divorce.

“She doesn’t want anyone thinking that she’s entered into the marriage with bad intentions, especially the Queen,” the insider told New Idea.

A royal insider told Star magazine that when Harry and Meghan moved into the antechamber before the ceremony at St. George’s Church to sign the marriage registry, they also signed the prenup.

Reference: Yahoo (June 18, 2018) “The Queen 'asked Meghan to sign a $500m prenup' before marrying Prince Harry”