UltraTrust Irrevocable Trust Asset Protection

Prenuptial

Prenuptial

Prenups: Five Things you Need to Know About Prenuptial Agreements

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Taking into account your potential inheritances, as well as your current real estate, tangible personal property, and investments might be enough to warrant pre-wedding planning. Most think a prenuptial agreement is the best way to solve this problem.   Prenuptial agreements have gained in popularity over the years, but don’t think that a prenup is the only option for anyone seeking to protect assets from a potential divorce. Prenups have been, and will continue to be, broken and/or circumvented. Consider other options to avoid a circumvented prenup and that awkward prenup conversation with your fiancee. Experts recommend an irrevocable trust to effectively separate assets from marital assets without the need for that awkward conversation. Here are the top 5 things you need to know:   1. Avoid an Awkward Talk Before the Wedding   Ted is engaged with just four months until the big day. Ted’s fiancé, Mary, wants the day to be perfect. Mary and her family have spent months looking at dresses, cakes, venues, and entertainment. Ted has a big secret though. He knows that he is set to inherit a sizeable amount of assets and has accumulated quite a bit of savings of his own. He loves Mary, but he knows not having his assets protected is a bad idea because anything can happen.   Ted eventually gathers up more courage than it took him to pop the question; casually mentioning to Mary that “we need to talk” and asking Mary for a prenuptial agreement. Mary smiles and asks, “What’s wrong Ted, don’t you think we’ll be together forever?” Just as Ted’s heart starts to sink into his stomach, Mary begins a tirade of anger, resentment, and hurt feelings. Mary storms off, and tells her family that she can’t believe what Ted has asked her to do – pre-plan their divorce!   Ted may have just ruined their relationship forever because he planted a seed of distrust and resentment that will sit in the back of Mary’s head for the rest of their marriage. Whether Ted backs down now about the prenup or not, Ted loses. Ted could just as easily have yelled from a mountaintop, “Mary is the love of my life, so I don’t need a prenup” all the while still protecting his assets in the event of divorce. In fact, there is a financial instrument that would allow Ted even greater protection without the awkward conversation or any conversation for that matter, an irrevocable trust.   The biggest problem with a prenuptial agreement is just that; the parties must specify all of the assets they own as well as the property they want to keep as separate during the marriage and thus retain ownership of in the event of a divorce. Do you want to live day-to-day saying this is mine and that is yours and making sure never to use your separate accounts for marital expenses?   Another problem is that it must be agreed upon and signed by both parties. The formalities that make a prenuptial agreement legally binding in the event of a divorce are another one of its most glaring disadvantages. Many people find it difficult to discuss the subject of maintaining ownership of separate property with the person they are about to marry. Talking about divorce at all while planning a marriage is a sticky situation at best. 99% of newlyweds would prefer to avoid the topic altogether if they could. Luckily they can… and still be protected.   The alternative is an irrevocable trust. An irrevocable trust is a legal document just like a prenup, but the advantage over a prenuptial agreement is that the trust does not require the involvement of your fiancee. Placing your assets in an irrevocable trust takes the assets out of your name and places them into the trust. The assets placed in an irrevocable trust never become part of the marital estate, so they are never at risk in the event of the marriage ending in a divorce, but you can still use the assets, sell them, or refinance them, etc.   2. Asset Protection from Legal Challenges in a Divorce   Although a prenup is what mainstream media talks about, challenging a prenuptial agreement successfully in a divorce proceeding is much easier than people realize – that is, until it is too late. Challenging the validity of a properly drafted, implemented, and funded irrevocable trust, however, in a divorce situation is just the opposite; there is nothing stronger. Court calendars are filled with court cases of divorces in all 50 states in which individuals who readily agreed to the terms of a prenuptial agreement, challenged the prenup’s validity years after signing it and were successful. These were millionaires using very expensive attorney’s to guide them and the prenups were still unwound. Real-life examples of cases include:   Galetta v. Galetta, 21 N.Y. 3rd 189 (2013) A notable law firm in NY created a prenup with defective wording of key portions of the document that held fatal to its validity. The New York Court of Appeals early in 2013 upheld a challenge to a prenuptial agreement on the grounds that the acknowledgement section did not contain language confirming that the notary properly identified the parties signing the document. In its decision in Galetta v. Galetta, the court found the document to be invalid even though the parties did not challenge the authenticity of the signatures. Happold v. Happold, 2011 N.J. Super. Unpub. LEXIS 2866, 2011 WL 5828597 (App.Div. Nov. 21, 2011) Attorney representing both parties invalidates prenuptial agreement 20 years later. During their divorce proceeding, the wife challenged the prenuptial agreement on the ground that she was not properly represented by an attorney when she signed it. In Happold v. Happold, a New Jersey court ruled in favor of the wife where the husband admitted retaining the attorney that represented both of the parties. Weymouth v. Weymouth, 87 So. 3d 30 (Fla. Dist. Ct. App. 4th Dist. 2012) Appreciation in value

Irrevocable Trust, Prenuptial

Pros and Cons of Prenuptial Agreement vs. Irrevocable Trust Protection

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Premarital discussions that deal with financial issues and the possibility of asset distribution in case of a breakup are as romantic as getting a root canal done or spending an entire day in traffic court. Prenuptial agreements are not for all couples, but many legal analysts argue that they should be. These premarital agreements present both advantages and disadvantages that future brides and grooms should give careful consideration to.   Prenuptial Pros   Here are the advantages of a prenuptial agreement (aka prenup agreement for short):   Conflict reduction: As long as a prenuptial agreement is conscionable and enforceable, it has the power of reducing the legal burden of divorce proceedings. In a way, signing a premarital agreement is akin to a couple having a proactive discussion about issues that they do not really want to argue about in the future.   Can a prenuptial agreement really protect your assets? The pros and cons of a prenup.   Establishing intent for spousal support and alimony: In many states that have adopted the Uniform Premarital Agreement Act of 1983, spousal support and even alimony can be waived before the wedding.   Financial protection: This is the most common reason cited as the rationale behind prenuptial agreements, particularly in states where the statutes follow the community property civil doctrine. In this regard, Arizona, California, Texas, and Nevada quickly come to mind.   Prenuptial Cons   If you believe that “All is Fair in Love and War,” you will be interested to know the following issues related to premarital agreements. In other words, here are the disadvantages of a prenup agreement: The basis for the agreement: Although divorce statistics in the United States are far from encouraging, would-be newlyweds do not really want to talk about a potential marriage dissolution. The formulation and execution of a premarital agreement imply a future breakup, which is the ultimate killjoy of wedding preparations.    The burden of inflexibility: Life situations may change, but prenuptial agreements tend to stay the same. Although these agreements can certainly be updated, they often require many of the same steps undertaken for their creation. This could mean retaining separate counsel and talking about the possibility of divorce all over again.   Lifestyle adjustment: Once a prenuptial agreement is signed, the future husband and wife must learn to adjust their lifestyles to the terms they agreed to before the wedding. Sudden changes in financial situations can be detrimental to a spouse’s lifestyle after divorce all because of a clause was not amended on a prenuptial agreement.   Enforceability of prenuptial agreements: Many couples who sign premarital agreements are unpleasantly surprised when they arrive in court and find out that their document is ruled invalid or unconscionable. Such agreements are subject to the opinion of the court, and they are often subject to legal challenges.   Retain Control: How Irrevocable Trusts Improve Upon Prenuptial Agreements   The use of irrevocable trusts as premarital instruments for asset protection and financial stability yield more advantages than prenuptial agreement and have none of the disadvantages.   With irrevocable trusts, individuals do not really pre-plan their divorce. Establishing an irrevocable trust is not something that a couple must endure; in fact, input from other parties other than estate planners is not required. This is good news for people who do not want to have that uncomfortable conversation about what to do in case of a divorce.   Creating an irrevocable trust does not mean that future wives, husbands or children have to be excluded from the enjoyment of assets. The grantor of the trust can designate beneficiaries to receive certain amounts of assets under certain circumstances. You are in control of all of the outcomes related to assets inside of the trust and with a properly drafted irrevocable trust, you can change your mind at any time. Why would you want a judge to dictate the terms of a divorce when he is not privy to all of the details and private conversations with your spouse?   One of the main goals of irrevocable trusts is asset protection, which happens to work very efficiently in divorce cases. Unlike prenuptial agreements that are subject to the interpretation and opinion of the court, a judge will only take a look at the assets outside of the trust to check for marital assets because assets placed inside the trust are by definition – not martial.   Whereas prenuptial agreements can be legally challenged with many strategies, precedent tends to favor the integrity of irrevocable trusts. Case law has been very positive towards irrevocable trusts in divorce cases; the same cannot be said of numerous premarital agreements that have been deemed invalid, unconscionable, unenforceable, and even nonsensical.   Aside from serving as excellent tools for asset protection, irrevocable trusts are great for estate planning. Prenuptial agreements simply do not survive death. Irrevocable trusts, on the other hand, may continue to earn value and serve the interests of the beneficiaries long after the grantor passes away.   In the end, the flexibility, efficiency, and control of assets inside irrevocable trusts makes them very attractive as legal instruments to be used in place of prenuptial agreements. To find out more about how an irrevocable trust can help you retain control of future outcomes better than a prenup, please call us now at (888) 938-5872.

Divorce, Prenuptial

Prenup vs. an Irrevocable Trust to Protect Assets in a Divorce

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The unfortunate truth in the United States today is that divorce is a 50% probability on average and if you or your spouse are in a stressful job such as a doctor, lawyer, or business owner, the number is more like 70%. Nobody likes to go into a marriage thinking about divorce, but with those statistics, it is difficult not to. The idea of pre-planning a divorce is typically difficult and distasteful using a prenup because of the sheer discussion. History shows that an irrevocable trust is stronger while at the same time emotionally easier to implement a protection strategy. Here are highlights followed by 25 actual cases throughout the country of divorces involving a prenup and an irrevocable trust.   So let’s compare and summarize the highlights:   The single most appealing advantage of an irrevocable trust over a prenup: YOUR FIANCEE DOESN’T HAVE TO KNOW AND DOESN’T HAVE TO SIGN ANYTHING! When there is an irrevocable trust involved, the court will only look to see if the assets in the trust are part of the marital assets and if not, the judge will exclude them. A prenuptial agreement can be challenged using many different strategies. A prenuptial agreement doesn’t protect against excessive child support. With an irrevocable trust, in most cases, you can pre-determine what assets go to your children, when they are given and under what circumstances. You can settle a challenge to a prenuptial agreement to avoid a long expensive divorce. With an irrevocable trust you hold the power to give whatever you want or nothing at all. Keeping the power in your hands can encourage the other spouse to settle for whatever they can get, thereby speeding up the divorce. A prenuptial agreement does not survive death. With an irrevocable trust, your assets will be used how you want them to be used with NO RESTRICTIONS. In other words, your spouse can’t acquire and spend your money on their new “friend” unless you allow it. Your children won’t be able to spend it away or lose it in a lawsuit. Your trust will continue to support whomever you want it to support and cut out those that you do not wish to support.   Divorce Case Summaries – With Links to the Actual Cases   Prenuptial Agreement Challenges:   1. Robbins v. Robbins, 39 Misc. 3d 1216 (Sup.Ct. New York 2013) A judge writes that “litigation over the validity and interpretation of prenuptial agreements is the bread and butter of divorce lawyers” in a case in which he refused to modify an agreement at the request of a wealthy husband. The agreement was signed two days before the wedding to protect the husband’s assets, but she successfully challenged it in the divorce as unfair. It is estimated that the wife was awarded an additional $4.2M in this case.   2. Stein v. Stein, 14 Misc. 3d 453 (Sup. Ct. Kings New York 2006) Prenuptial agreement executed 24 hours before the marriage successfully challenged by unrepresented wife. Court found that the failure of the husband’s signature to be properly acknowledged by a notary public for over seven years after he signed it was fatal to the validity of the agreement. It is estimated that the wife was awarded an additional $1.2M in this case.   3. In re Marriage of Melissa, 212 California App. 4th 598 (Ct of App. 2012) A spousal support waiver in a prenuptial agreement was invalid because state law at the time the agreement was signed did not allow such waivers. Subsequent changes in the law did not affect the waiver because prenuptial agreements are interpreted according to the law when signed instead of the law at the time of attempted enforcement. It is estimated that the wife was awarded an additional $2.35M in this case.   4. Herpich v. Estate of Herpich, 994 So. 2d 1195 (Florida. Ct. App. 2008) Couple married after their first marriage to each other ended in a divorce. Husband subsequently died. Widow tries to enforce a prenuptial agreement from their first marriage to protect husband’s children from another marriage from claiming part of his estate. Court rules that divorce judgment discharged and terminated the prenuptial agreement.   5. Iocovozzi v. Iocovozzi, 2013 New York Slip Op 4164 – NY: Appellate Div., 4th Dept. Entire prenuptial agreement declared void where spouse seeking to maintain its validity failed to perform a section directing the payment of moving expenses.   6. Rogers v. Gordon, 2012 N.J. Super. LEXIS 1385, 2012 WL 2196673 (New Jersey App. Div. 6/18/12) Although a provision in a prenuptial agreement waiving counsel fees enforceable as far as legal fees pertaining to equitable distribution, the court awarded fees to the wife’s attorney for work done on her behalf on the issue of alimony. The court ruled that the prenuptial agreement’s language was not clear enough as to waiving fees related to alimony. The wife was awarded an additional $35K to pay her divorce legal fees.   7. Thompson v. Butir (In re Parentage of Thompson), 2013 Illinois App (3d) 110905-U, 2013 Ill. App. Unpub. LEXIS 1200, 2013 WL 2488057 (Ill. App. Ct. 3d Dist. 2013) Appeals court affirmed judgment of the trial court ordering mother and father to share equally the cost of their son’s college education. Mother argued that trial court erred by taking into consideration the assets and income of her current husband because of language in their prenuptial agreement absolving the second husband from responsibility for support of the child of her first marriage. The agreement did not preclude the court from looking at assets and income available to the mother.   8. In re Marriage of Barry Bonds, 71 California. App. 4th 290, 83 Cal. Rptr. 2d 783, 1999 Cal. App. LEXIS 318, 99 Cal. Daily Op. Service 2661, 99 Daily Journal DAR 3459 (Cal. App. 1st Dist. 1999) Appeals court, in 1996, overturned the prenuptial agreement that wife signed before marrying baseball great, Barry Bonds. The appeals court ruling relied

Asset Protection, Divorce, Irrevocable Trust, Prenuptial

Asset Protection in Divorce: How to Protect Assets From Divorce

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Will learning about asset protection in divorce be a waste of time if you live in a community property state? How does one protect assets before or during a divorce? Common steps to divorce asset protection for gifts, family heirlooms, and real estate. You will need to consult with a divorce lawyer, professional appraiser, and estate planner. Definition of Equitable Distribution and fair market value of assets in divorce.      Watch the video on Like this video? Subscribe to our channel.   How to protect your assets during a divorce? Protecting assets through a divorce can be a complex financial process further complicated by the emotional devastation. If you are going through a divorce it may be important to you to determine ahead of time what your assets are and how you will protect them from your spouse.   The first step will be to hire a lawyer familiar with the laws for dividing property in your state. Good legal council will prove invaluable in defending your claims to property and can give you names of appraisers and accountants to help your case. Your divorce lawyer will also assist you on how to remove any Powers of Attorney granted to your spouse for control of your property and finances.   There are several steps you should consider when trying to protect your assets during Divorce:   Identify everything that was given to you as a gift or family heirloom. Identify community property. Hire a professional appraiser. Figure out how you will split retirement and physical assets.   Identify Gifts and Family Heirloom to Protect Assets During Divorce   A camera will prove to be your best friend during a divorce. You should make a list of all items which were given to you before and after the wedding and take pictures of these items prior to removing them from the residence. Once you have compiled your list you should remove all your personal items to a location not easily accessible to your spouse.   Your spouse will be within their rights to claim any items you leave behind in the residence and do not immediately claim. If you or your spouse left the residence voluntarily, either of you is entitled to return at any time and retrieve belongings. If locks have been changed, except in the case of a court order, you are within your rights to have a locksmith open the doors. Your next step will be obtaining, if possible, written proof of who gave you the items and when they were received.   Community Property Assets   Community property of assets refers to the belongings shared by you and your spouse, such as the furniture, pots and pans, etc. It is important to take pictures of these belongings as well before you remove the items you wish to claim as your own. Photographs are especially valuable if there are expensive items you would like to have but did not have the ability to move and you feel your spouse may try to take them. All photographs should be kept in a secure location not readily accessible by your spouse.   Hire a Professional, Independent Appraiser for Divorce Asset Protection     Division of property during a divorce is determined by the fair market value of the disputed items to ensure one party is not being favored over the other during settlement. An appraiser will be necessary to determine accurate estimates, although you should consult your lawyer on finding a qualified individual.     Using the same accountant who handled your assets in the past may seem suspicious and a court may order another appraisal or rule in favor of your spouse’s accountant. It is critical that an appraisal be straightforward and unbiased for the protection of assets during Divorce.   Estate Planner Consultation to Divide and Protect Assets During Divorce   When considering how to divide assets prior to divorce settlement, it is wise to consult a professional estate planner or financial analyst. For example, if you are thinking about selling your home it may be wise to do so prior to settlement since you are entitled to deduct up to $500,000 of the sale from capital gain taxes.   Selling the home after the divorce is final and reduces your benefit to only half of the sale price. Retirement assets and stocks should also be discussed. If you and your spouse choose to split the retirement benefits you must sign a Qualified Domestic-Relations Order (QDRO) which notifies the pension sponsors how to pay the benefits. Although you cannot take stocks in your spouse’s name you may be entitled to the proceeds once they are sold.   Exceptions to the Rule on Divorce Asset Protection   Some states, such as New York, are known as “equitable distribution” states. “Equitable” mean “fair” and assets will not be divided right down the middle based on their fair market value. Division of assets according to New York Divorce law states that all property obtained prior to the marriage still belongs to the individual and all property obtained afterwards will be distributed by the court based on established guidelines.   The factors a court considers in equitable distribution states for divorce assets are:   The difference in income and property from when the marriage began to the date divorce was filed. The age of both individuals and how long they were married. The needs of a parent who has won full custody of children involved (i.e. will they need the house to properly care for the child?) Any loss of pension or inheritance. What contributions the parties made to acquire the property. Future earning potential of both parties. Tax consequences. If you are considering divorce it is wise to consult a lawyer as soon as possible to ensure the protection of your assets and help you understand your rights as they pertain to individual state law. Estate Street Partners is available for consultation on how to protect your assets

Estate Planning, Prenuptial

Five Estate Planning Things You Need to Know After Getting Married

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1. You both own everything.   You and your spouse are now the joint owners of all of the marital assets with a few exceptions and a few state specific variables. This means that if one spouse’s income has a lot more than the other, it doesn’t matter. Those savings accounts and even retirement accounts may be split evenly upon divorce.   2. Children of prior marriages are forgotten.   Of course the children aren’t forgotten, but they are forgotten in the estate planning world. Most state intestate (without a will) laws state that your assets go to your spouse in the event of an untimely death. That leaves your children from a prior marriage directly out of the line of descendants that will receive your assets. Unless your spouse gives them assets in their will, as a beneficiary of a trust, or outright, your children of a prior marriage will never see any of it without proper estate planning.   3. Children of the current marriage may be forgotten.   If you die and your spouse takes all of the estate, your spouse can do whatever they please with all of that money. They can take trips around the world, spend it on their new love interest or even give it to their family. In most states, there is no law saying it has to go to your children. That’s right, your children with your current spouse may never get any of your estate without the right planning.   4. There is twice the chance of long term care eating up your assets.   People don’t generally think of long term care when they are under retirement age, but the sooner one acts, the sooner the time clock starts running on Medicaid’s 5 year look-back clock. To qualify for Medicaid to pay for you or your spouse’s nursing home care, you have to own very little; like less than $2000. Now you have two people to worry about. To get to the point where Medicaid thinks you own very little, the nursing home will bill you either to death or until you own very little and ultimately qualify for medicaid. If you give your money away and not enough time has passed, you won’t qualify for Medicaid and have to pay out of pocket. This can really be a problem if the person who you gave it to won’t give it back or cannot because they already spent it!   5. Your spouse could end up with half of your business, with the right to make decisions.   What could be worse than a spouse to whom you are divorced from telling you what to do with your business? Well, how about a spouse who decides you are not being cooperative, so they get a court to order you to sell the business.   What can you do to protect your assets after you get married:   In addition to the run-of-the-mill estate planning documents, a will, power of attorney, health care proxy and living will, one document can help with all of these estate planning items: An Irrevocable Trust. When you are married, you and your spouse can choose to put money into an irrevocable trust. The assets will be safe in the trust from you or your spouse and the trustee who is in charge of the assets will have to distribute them in the manner prescribed by you – not the manner the State tells you. Thus, those particular assets are divided when, presumably, the couple is still in love and thinking rationally, rather than when you are at each others’ throats. With less to fight over at divorce, the process could be simpler, but the Irrevocable Trust can also help with the other matters listed above.   The instructions in the Irrevocable Trust can say whatever you and your spouse want them to say. When forming the trust, you can include your kids from a past marriage. You can also tell the trustee to hold the funds and only give them out for certain expenditures or landmarks, like college funding or on their wedding day. All the of kids can be provided for, but not just by giving them a bucket of money and letting them run free. The assets are protected by the trust and thoughtfully given out by the trustee.   Putting assets in an Irrevocable Trust may also help you qualify for Medicaid. When you put assets in an Irrevocable trust, you are effectively getting them out of your name and into the name of the trust. You don’t own them anymore, although you can benefit from them – think about it like leasing a car. When you apply for Medicaid, if the lookback period has gone by, those assets will not be counted towards your net worth. For example, if you were to put $1.3M in an Irrevocable Trust, 10 years ago and applied for Medicaid with $20 in your personal bank account, Medicaid would pick up the tab for long term care. If you kept the $1.3M in your name, then you, or your spouse would not qualify for Medicaid and the long term care facility would upwards of $12,000 or more a month for your care until nearly all the assets are gone.   If you have your own business or are starting one you should learn about LLCs and Irrevocable Trusts. You can put your new or existing LLC in a trust and specify how you want the profits distributed. In the event of a divorce, the business would continue to run exactly how it has run, the profits are distributed exactly how they have been and that pesky ex-spouse is written out of a controlling interest. After all, while a marriage is doing well, the spouse will say, “Oh honey, that’s your business. I never want to interfere,” but if the marriage goes sour, “I want to own your business, and if I can’t own it,

Divorce, Prenuptial

Why Do Marriages Fail? Can Prenuptials Agreements Prevent Divorce?

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Can a premarital agreement help in your marriage? Is there some better way to protect your assets and marriage at the same time?   Why do so many marriages fail in the United States? Let us count the reasons: A 2012 survey among relationship counselors conducted by online relationships and advice site YourTango.com revealed that  infidelity and lack of interest in married life are often cited as the most significant motives couples mention when they get divorced; however, 74 percent of experts believe that disagreements about money are strong predictors of marital separation.   All civil unions have certain monetary expectations. Spouses must be prepared to provide financial support to one another, and they are expected to share the property and assets they acquire throughout the marriage. A spouse refusing to provide financial support despite having the means to do so can be construed as grounds for divorce in some states.   Many couples who feel that eliminating monetary constraints from their marriage will help them stave off divorce are likely to sign a prenuptial agreement before tying the knot. They are certainly onto something here, but they are not choosing the correct legal instrument.   The best way to keep premarital assets separate does not even require the signature or knowledge of both parties. Irrevocable trusts are the most divorce-proof legal instruments for keeping absolute control and ownership of separate assets. These trusts are commonly used for formidable asset protection and estate planning purposes, and they are even better in divorce situations.   Secure Assets Make Stronger Marriages   Relationship counselors and legal analysts say that the laws regulating the distribution of assets in divorce can actually encourage it. Ideally, couples should be able to formulate and agree to the financial terms of their marriages without state laws interfering. For this reason, many engaged couples seek prenuptial agreements as a way to improve upon the laws.   Although prenuptial agreements can be used for a variety of purposes, the most common reason to get one is to clearly establish separate property. Not all jurisdictions share the same views about separate property and marital assets when it comes to divorce; for this reason, skilled divorce attorneys routinely advise their clients on strategies they can use to get non-marital assets from their spouses. With irrevocable trusts, however, these strategies will not work due to their unique legal structure and superb asset protection that these instruments provide across all jurisdictions when completely prior to the marriage.   How Prenuptial Agreements Particularly Fail Hugely   Summoning a fiance or fiancee to sign a prenuptial agreement can essentially create a preamble for divorce, particularly in “rich spouse, poor spouse” situations when a monetary settlement is determined ahead of divorce. For example, a wealthy business woman may agree to give her future husband 3 million dollars in case of a divorce as long as he waives all his rights to marital property, particularly the profits realized by his wife’s successful business. There are two problems with this flawed prenuptial approach.   The first problem is that prenuptial agreements do not have a good track record in the American legal arena. Case in point: Cioffi-Petrakis v. Petrakis, 103 A.D.3d 766 (2nd Dept. 2013), in which the wife of a millionaire in Long Island prevailed in appellate court by throwing out a 1998 prenuptial agreement; she may now be entitled to a considerable chunk of her husband’s fortune.   There’s also Eyster v. Pechnik, 71 Mass. App. Ct. 773 (2008), in which an appellate court determined that a prenuptial agreement was not clear on its intent to waive marital rights.   The second problem in our example above is that the husband may feel as if it would be too easy to walk away from a divorce with a million dollars. He may no longer care about marital assets or even about the marriage itself: He just wants that cool settlement of $3 million dictated by the premarital contract. So he is not likely incentivized to “make his marriage work at all costs,” some might even say that he is more likely to cheat, misbehave, and become a difficult spouse anyway.   A disillusioned wife who was guaranteed a certain monetary disbursement on a premarital agreement may not feel like it would be worth her time to try to salvage the marriage. She may be married to a multimillionaire who only agreed to part with a few hundred thousand in case of divorce, but a realistic wife may want to move out of the marital abode with the children and simply let the court determine child support.   The two problems mentioned above serve as proof of the uncertainty prenuptial agreements bring to marriages. For these reasons, irrevocable trusts are far better premarital instruments with regard to keeping separate property separate.   How Irrevocable Trusts Make Stronger Marriages   Spouses who understand and accept that they will not get anything other than the marital assets outside of the trust if they get divorced are less likely to stray from their marriages. In fact, they are more likely to understand that marital bliss cannot be achieved by thinking about how much they can get after a marriage dissolution.   In other words, irrevocable trusts can actually compel spouses to work harder on their marriage. To find out more about how irrevocable trusts can improve your life, please contact UltraTrust.com today.

Irrevocable Trust, Prenuptial

How to Retain Control of Your Premarital Assets…Not With Prenuptials

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Protecting Your Business Assets and Interests From Divorce   What is the best way to control premartial assets?   Would-be newlyweds these days have a lot to worry about, particularly when it comes to retaining control of property and assets. The line between marital assets and separate property is becoming thin due to case law and the way some jurisdictions handle divorce proceedings. This potential concern has led to the popularity of prenuptial agreements and other premarital contract, which are not always the best instruments for their intended purpose.   In the United States, prenuptial agreements are legally recognized in many jurisdictions by virtue of the Uniform Premarital and Marital Agreements Act, which saw its first draft in the mid-1980s. Since then, many states have adopted the Act, although there are still sharp differences with regard to intended scope and the degree to which prenuptial agreements can be enforced in some jurisdictions. Therein lies a major problem with prenupl agreements: They are not always guaranteed to work as planned.   There is a better legal instrument that engaged couples can use in lieu of prenuptial agreements. An irrevocable trust has many advantages over a prenuptial agreement, and it provides remarkable asset protection in comparison. One of the best features of irrevocable trusts is that their creators, known as grantors, are able to retain control of their property and assets at all times, even when things seem to get out of control during a divorce.   Understanding Separate Property in Divorce Proceedings   Seeking agreement on property, assets and income issues is at the heart of most prenuptial agreements. Modern life has gotten a bit complicated, and thus there is a valid need for people to settle issues related to property and assets before they get married.   Prenuptial agreements are essentially contracts that establish what couples wish to retain as separate property. Although statutes in various states differ on the concepts of how property is divided during marriage dissolution proceedings, the general idea of separate property follows the principles below:   Property owned prior to marriage is separate. Inheritances are considered separate assets. Gifts made by third parties as well as compensation from personal injury judgments should be considered separate from marital assets.   Any other assets acquired after the wedding would generally be considered marital property, although state law has the final say based on principles of equitable distribution and community property. If you live a community property state such as California, Texas, Arizona, Washington, Nevada, Louisiana, Wisconsin, or Idaho, you can through these rules out the window. Many couples in these state even with a prenup had their prenups rendered worthless by the courts.   In addition, outlining separate property on a prenuptial agreement in general does not leave couples off the hook with regard to state law or to the circumstances of married life. Separate assets listed on a prenuptial agreement can become marital property if their integrity is changed during the marriage; for example, adding a spouse as a co-borrower in the mortgage of a home purchased before marriage just to get a lower rate on a refinance. The same goes for money that was inherited and deposited into a joint savings account.   In a way, getting married is tantamount to ceding control of your property to the laws of the state whether you get a prenup or not. A good way to illustrate this is the issue of appreciation of separate property. The divorce statutes of many states consider the increase in value of separate assets to be marital property. For example, a woman who wants to keep a portfolio of blue-chip stocks as separate assets might have to split the gains of the share prices and even dividends paid when she heads to divorce court. A similar example would be a vacation home in an active housing market that appreciated in value before the marriage dissolution.   Keeping Control of Separate Assets with an Irrevocable Trust   To some extent, all couples who walk down the aisle have a prenuptial agreement even if they did not actually sign one. The divorce laws of each state act as a prenuptial agreement in the sense that the newlyweds agree to divide up their property according to statute and renounce control by turning it over to the state and the courts.   The most tangible way to retain control of assets before, during and after a marriage is to use an irrevocable trust. These instruments are regarded as being the most effective tools of asset protection and estate planning, and they are superb alternatives to prenup agreements.   With an irrevocable trust, a future groom or bride assigns ownerships of his or her assets to a legal contract that stipulates who gets the benefit of separate property. The other party does not have to sign or go through the awkward and unromantic process of a prenuptial agreement. Spouses do not need to know about the assets kept in the trust, either; the separate property does not have to disclosed.   In case of a divorce, the assets kept in an irrevocable trust do not come into play. A judge will only look into the trust to ensure that no marital assets were surreptitiously transferred therein.   The grantor who created the trust is free to call the shots with regard to the assets he or she brought to the marriage at any time. By executing an irrevocable trust, a grantor effectively asserts full control over property, even when going through a divorce or other difficult situations.   To find out more about how irrevocable trusts can make a difference in your life and allow you to retain control of your property at all times, please contact UltraTrust.com today.    

Prenuptial

To Prenup Or Not To Prenup? Risks of Default Intestacy in Your State

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Prenuptial or premarital agreements are considered by many to be among the most cold-hearted, unloving and unromantic of all wedding preparations. The thought of retaining individual attorneys and taking accountability of finances and assets for the purpose of dividing it, often unequally, as marital and separate property is just as uninviting as a visit to the dentist.   Couples who wish to avoid the killjoy of a prenuptial agreement and instead focus on more enjoyable premarital tasks, such as planning for their honeymoon and choosing the bakery that will design the wedding cake, are essentially submitting to the prenuptial mandate that their state laws have in place.   Civil Statutes and Prenuptial Agreements   Each state of the Union has a body of law that governs important civil matters such as familial relations and property. Take, for example, the case of an individual who passes away without having left a will. How should his or her assets and liabilities, the estate, be handled and distributed. States have intestacy laws and procedures in place to handle these situations with a certain degree of equity and fairness, and similar laws and procedures exist to deal with property disputes that arise during divorce proceedings.   In the absence of a prenuptial agreement, a trust or other legal instrument to handle marital and separate property, states have certain statutes in place that direct the court to perform in a certain way. When the court is left to make decisions and take actions in distributing property during a divorce, the results can be swift and stern rather than right or fair. Some states have a strict 50/50 view of property distribution during marriage dissolution; it is almost as if they want to apply a chainsaw to disputed property just so they can split it in a half and move on to the next case in the court docket.   Prenuptial agreements are used as financial arrangement between couples who do not want to be left at the mercy of their state’s divorce laws. There are several problems with these premarital agreements, however, which is why irrevocable trusts often make more sense that prenups insofar as protecting assets from being unfairly distributed in case of divorce:   Validity of Prenuptial Agreements   Premarital agreements are subject to guidelines and limits imposed by state law. Would-be brides and grooms who think they can waive alimony or excessive child support must remember that many jurisdictions require prenuptial agreements to be conscionable, which means that incorrect waiver of certain rights may invalidate the entire instrument.   Couples are often advised to retain their own legal counsel prior to the drafting and execution of prenuptial agreements for the purpose of making sure that individuals’ interests are respected and that the instrument is valid. In this sense, a prenuptial agreement may represent a considerable legal expense before the wedding. In the end, the couple still has to sit down and go through the unpleasant motions of determining what to do in case they breakup. In a way, they are already planning for their divorce.   The construction of an irrevocable trust does not require the signature of the bride or groom. This legal structure is essentially a contract initiated by an individual who wishes to place his or her property and assets in trust for the benefit of someone else. Prenuptial agreements are often sought by people who wish to protect their property from what state laws dictate in case of divorce; irrevocable trusts are far better for asset protection than premarital contracts because they are not subject to the same legal challenges.   Predetermination of Asset Distribution   Chivalrous husbands who want to leave everything to their wives and children in case of divorce or death are better served by irrevocable trusts than by prenuptial agreements. Trust agreements empower individuals to make asset distribution determinations in advance and without having to wait on the approval of judges or juries.   Spouses can always be made beneficiaries of irrevocable trusts. A married woman who chooses to grant financial support to her husband can determine exactly how much and for how long through irrevocable trust instructions. During divorce proceedings, a judge will only look into an irrevocable trust to check for marital assets; all other property such as investments, jewelry, business assets, insurance policies, artwork, etc., is excluded.   Unlike irrevocable trusts, prenuptial agreements serve no estate planning purpose. Premarital contracts do not survive death; irrevocable trusts, on the other hand, continue to serve beneficiaries in perpetuity. Children are able to enjoy the assets according to instructions left by the grantor to the trustee, and scorned ex-wives or ex-husbands are not able to tap into the trust just so they can spend money on their new romantic interests.   To answer the question at the heart of this article: With prenuptial agreements, it takes two to tango. Even if a premarital agreement is not executed before the wedding, jurisdictional statutes will determine how assets are distributed should the marriage be dissolved in the future. This is not the case with irrevocable trusts since they do not require the signature of the groom or the bride or even their input. Irrevocable trusts are the clear answer to prenups.    

Lawsuit, Prenuptial

AVENT, Appellee, v. AVENT, Appellant: Prenuptial Court Case 2006

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AVENT v. AVENT AVENT, Appellee, v. AVENT, Appellant. No.L-05-1140. – April 14, 2006 Martin E. Mohler and Heather J. Fournier, Toledo, for appellee.M. Susan Swanson, for appellant.   {1} This appeal comes to us from a judgment issued by the Lucas County Court of Common Pleas, Domestic Relations Division, which determined the marital-property division in a final divorce decree. Because we conclude that the trial court erred in its determinations, we reverse.   {2} Appellant, Elizabeth A. Avent, and appellee, Billy R. Avent Sr., were married in 1978 and executed a prenuptial agreement, which stated that the parties desired to keep each of their financial estates separate and that any property owned by them prior to or acquired after the marriage would remain their separate properties. Each waived any claims against the other arising “by force of the contemplated marriage.”   {3} Billy filed for divorce in December 2003. At the time of trial in December 2004, he was 86 years old, his wife was 81, and both were retired. The trial court found that the parties were unable to remember many important facts about their earned income over the years or their present assets. The following summarizes the court’s factual findings or other undisputed facts presented at trial.   {4} Billy retired in 1983, after 43 years of employment with the same company. He received $141,274 as a lump-sum retirement distribution from that employment, which was placed in “separate IRA [Individual Retirement Accounts] accounts.” His yearly income included $14,628 from Social Security plus $9,118 from his IRA, for a total of $23,746.   {5} Elizabeth retired in 1986, after working for 11 years as a cafeteria worker. Her yearly income totaled $12,814, which included $461 per month from Social Security, $169 per month from School Employees Retirement System (“SERS”) and $4,000 to $5,000 per year in withdrawals from “her present assets.”   {6} Billy’s grandson, a financial consultant, testified regarding the present value of assets in Billy’s name, which the court valued at $129,078. He stated that he had been handling his grandfather’s finances since 1997. Elizabeth’s assets were valued as follows. During the pendency of the divorce action, Elizabeth’s assets were placed in two trusts: the Avent Irrevocable Trust and the Elizabeth A. Avent Living Trust. The Avent Irrevocable Trust consisted of Elizabeth’s home and 278 bonds. Elizabeth’s accountant said that the bonds had a cost basis of $99,175, with a future value of $245,852. The court stated that interest income on the bonds until maturity was projected to be $155,677. The court also valued Elizabeth’s marital portion of appreciation on her house at $30,000.   {7} The court valued Elizabeth’s living trust (“revocable trust”) at $188,049, which included cash gifts made to her daughter and various bank accounts that were all solely in Elizabeth’s name. The court declared that the appreciation on the wife’s house was marital, awarding her the $30,000 appreciation of that property and an additional $60,000 “in consideration of her share of husband’s separate pension, the fact that there will be no spousal support, and assets she claims and accountant deemed to be inherited.”   {8} The court determined that all of Elizabeth’s bank accounts, bonds, or other cash assets held in her own name were marital because she had failed to adequately trace her “separate property” owned prior to the marriage to her present assets. The court stated that Billy had traced his property sufficiently, awarding him the $129,078 of assets in his name. In addition, the court ordered Elizabeth to transfer to Billy one-half of her bonds placed in the irrevocable trust and to pay Billy an additional $64,045, one-half of the remaining assets in Elizabeth’s name ($188,089 minus $60,000 equals $128,089 divided by two).   {9} Neither spouse was awarded spousal support, both spouses were ordered to pay their own attorney fees, and court costs were to be split equally between the parties.   {10} Elizabeth now appeals from that decision, arguing the following three assignments of error:   {11} “I. The Trial Court erred to the prejudice of the Appellant by requiring the tracing of separate assets that had not been found to have been commingled.   {12} “II. The Court abused its discretion in finding that Appellant had failed to prove her financial accounts to be separate property by a preponderance of the evidence.   {13} “III. The Court abused its discretion and committed prejudicial error in making a distributive award from Appellant’s separate property without considering all of the factors set forth in R.C. 3105.171(F)(1) through (9).”   I   {14} In her first assignment of error, Elizabeth argues that the trial court erred in requiring her to trace assets that were never commingled with her husband’s funds and that the appreciation of her home should have been deemed separate property. We agree.   {15} In a divorce action, the domestic relations court is required to determine whether property is separate or marital and to divide both marital and separate property equitably. R.C. 3105.171(B). Marital property generally includes all property acquired by either party during the marriage as well as the appreciation of separate property due to the labor, monetary, or in-kind contributions of either party during the marriage. R.C. 3105.171(A)(3)(a)(i) and (iii). Marital property is to be divided equally in general, and each spouse is considered to have contributed equally to the acquisition of marital property. R.C. 3105.171(C)(1) and (2). However, marital property does not include separate property. R.C. 3105.171(A)(3)(b). Under R.C. 3105.171(A)(6)(a)(v), separate property includes any real or personal property that is excluded by a valid antenuptial agreement. Thus, Ohio law specifically allows for property that would normally be considered marital to be excluded from a division of marital property by a valid antenuptial agreement. Todd v. Todd (May 4, 2000), 10th Dist., No. 99AP-659, 2000 WL 552311.   {16} An antenuptial agreement is a contract entered into between a man and a woman in contemplation, and in consideration, of their future marriage whereby the

Asset Protection, Prenuptial

Prenup to Protect Wealth: 5 Critical Flaws with Prenuptial Agreements

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 Watch the video on Prenup to Protect Wealth: 5 Critical Flaws with Prenuptial Agreements Like this video? Subscribe to our channel.   Are you ready for the big day?   As you look forward to life with your new spouse, the last thing on your mind is the specter of divorce. After all, you and your partner love each other — right?   Maybe so, but when filling out current and future assets on the prenup asset form — from current real estate holdings, valuable personal property and investments to potential inheritances and other windfalls — can’t be protected by love alone.        Watch the video on Prenup to Protect Wealth: 5 Critical Flaws with Prenuptial Agreements   Like this video? Subscribe to our channel.   If you’re committed to protecting your legacy in the event that your upcoming marriage ends in divorce, pre-wedding planning is crucial. Many believe that using a prenup to protect wealth is the most effective planning tool.   Prenuptial agreements became common in the 1970s and have gained in popularity ever since. However, a “prenup” is far from the only form of pre-divorce asset protection.   In fact, prenups have been — and will continue to be — broken and/or circumvented with relative ease. Anyone who tells you that a prenup is a rock-solid, indisputable form of protection is either misinformed or lying.   Beyond their legal defects, which we’ll get to in a moment, prenup to protect wealth have another serious drawbacks: They require your future spouse’s consent. This inevitably leads to an awkward, potentially painful pre-wedding conversation that may challenge even the strongest of relationships.   You have a much stronger, less awkward pre-wedding planning option at your disposal: an irrevocable trust. Experts know that irrevocable trusts effectively separate personal assets from marital assets without the need for that awkward conversation.   Here are the top 5 things you need to know about this powerful form of asset protection:   1. Avoid an Awkward Talk Before the Wedding   Ted is engaged, and just four months remain until the big day. Ted and Mary, his fiance, both want the day to be perfect. Mary and her family have spent months planning and preparing for the wedding.   Ted, though, has a big secret: He’s set to inherit sizable amounts of money and assets. What’s more, he has accumulated substantial savings of his own. He loves Mary, but he’s aware of statistics that show that even the strongest marriages can end in divorce. He knows that he needs to protect his current and future assets.   Ted decides to ask Mary for a prenup to protect hi wealth, summoning more courage than it took to pop the question.   “We need to talk, Mary,” he says, going on to explain his concerns.   Smiling like a fox who’s just cornered a defenseless hen, Mary strikes back. “Seriously, Ted?” she asks venomously. “I thought you were different, but you’re already planning for our divorce!”   Ted’s heart sinks as Mary launches into an angry, resentful tirade and storms off. When her family hears about the conversation, they rally around her — and against Ted. Even if the wedding goes forward as planned, Ted’s apparent mistrust of his future wife’s intentions have planted a seed of distrust and resentment that Mary will never forget.   In other words, Ted has already lost this battle and potentially destroyed a beautiful marriage.   It didn’t have to be this way. If he had opted for an irrevocable trust, Ted could have secured even greater asset protection without ever telling Mary what he’d done — and creating a firestorm of hurt feelings and broken trust in the process.   How is a prenuptial agreement inferior to an irrevocable trust? Let us count the ways.   The biggest drawback is that parties to a prenup must specify all of the assets they currently own as well as the property they want to keep as separate during the marriage and thus retain ownership of in the event of a divorce. Practically speaking, this means that individual spouses may never use their separate personal accounts for marital expenses.   Trust us: Rigorously compartmentalizing your personal and marital assets gets old fast.   A prenup must also be agreed upon and signed by both parties. It’s very difficult to discuss the subject of maintaining ownership of separate property with your future spouse — just ask Ted. 99% of soon-to-be-married couples would prefer to avoid talking about divorce while planning their marriage.   They can — without sacrificing asset protection. The secret: an irrevocable trust.   This document looks just like a prenup, but it offers one key advantage: It doesn’t require the involvement of your fiance.   When you place assets in an irrevocable trust, they’re no longer held in your name. They never become part of the marital estate, so they’re never at risk in the event of a divorce. Don’t worry: You can still use, sell, or refinance assets and cash placed in an irrevocable trust.   2. Asset Protection from Legal Challenges in a Divorce   Despite prenup agreements’ popularity to protect wealth, even partially informed lawyers can successfully challenge them in a divorce proceeding. By contrast, it’s virtually impossible to challenge the validity of a properly drafted, implemented and funded irrevocable trust. There is nothing stronger.   History is littered with divorce cases between spouses who successfully challenged the validity of their prenup to protect wealth despite initially agreeing to the documents’ terms. You can find examples of such cases in all 50 states. We aren’t just talking about regular Joe’s here — most of these cases involved millionaires who used very expensive attorneys to guide them. In the end, no amount of money or effort could save their prenuptial agreements.   Real-life specific examples of cases include:   Galetta v. Galetta, (NY 2013) A notable law firm in NY created a prenup with

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