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Five Estate Planning Things You Need to Know After Getting Married

Posted on: April 5, 2017 at 4:45 am, in

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, I want it sold and half the profits, or if I can’t own it or sell it, I want to run it.” Better to decide when things are good with a well written Irrevocable Trust such as The UltraTrust.

Why Do Marriages Fail? Can Prenuptials Agreements Prevent Divorce?

Posted on: March 8, 2017 at 12:53 am, in

Prenuptial agreement with US dollar bill under magnifying glass.
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.

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

Posted on: March 7, 2017 at 7:32 am, in

Protecting Your Business Assets and Interests From Divorce
Husband and wife ready for boxing fight match.
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.

Pros and Cons of Prenuptial Agreement vs. Irrevocable Trust Protection

Posted on: March 7, 2017 at 7:30 am, in

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):
Prenuptial agreement contract.
Can a prenuptial agreement really protect your assets? The pros and cons of a prenup.

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.
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.

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

Posted on: March 7, 2017 at 7:28 am, in

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.
Woman tearing up prenuptial agreement contract.
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.

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

Posted on: March 7, 2017 at 7:28 am, in

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 property rights and economic interests of either the prospective wife or husband are determined and set forth in a written instrument. Gross v. Gross (1984), 11 Ohio St.3d 99, 102, 11 OBR 400, 464 N.E.2d 500. The law of contracts applies to the interpretation and application of antenuptial agreements. Fletcher v. Fletcher (1994), 68 Ohio St.3d 464, 467, 628 N.E.2d 1343. The interpretation of a contract that is clear and unambiguous is a question of law, and no issue of fact exists to be determined. State ex rel. Parsons v. Fleming (1994), 68 Ohio St.3d 509, 511, 628 N.E.2d 1377; Davis v. Loopco Industries, Inc. (1993), 66 Ohio St.3d 64, 66, 609 N.E.2d 144. On appeal, questions of law are reviewed de novo. Wiltberger v. Davis (1996), 110 Ohio App.3d 46, 51-52, 673 N.E.2d 628.
{17} In Ohio, antenuptial agreements are valid and enforceable “(1) if they have been entered into freely without fraud, duress, coercion, or overreaching; (2) if there was full disclosure, or full knowledge and understanding of the nature, value and extent of the prospective spouse’s property; and (3) if the terms do not promote or encourage divorce or profiteering by divorce.” Gross, 11 Ohio St.3d 99, 11 OBR 400, 464 N.E.2d 500, paragraph two of the syllabus. See, also, Fletcher, 68 Ohio St.3d at 466, 628 N.E.2d 1343. If parties have freely entered into a prenuptial agreement, a court should not substitute its judgment and amend the contract. Gross, 11 Ohio St.3d at 109, 11 OBR 400, 464 N.E.2d 500.
{18} In the present case, the parties entered into a prenuptial agreement that clearly expressed, “[I]t is mutually desired and agreed by the parties that the estate of each of the parties shall remain separate, as well after as previous to the solemnization” of their marriage. The agreement states further that the husband’s estate “shall remain and be his separate property, subject entirely to his individual control and use, the same as if he were unmarried; and that the second party [wife] shall not acquire by force of the contemplated marriage for herself, her heirs, assigns or creditors any interests in his property or estate, or right to the control thereof, and the second party shall and does hereby waive, release, and relinquish, and shall by these presents be barred from any and all claim or rights of dower, year’s support, right to live in the mansion house, property exempt from administration, distributive share or intestate share of the other’s estate, from any and all claims or rights as widow, heir, distributee, survivor, or next of kin, and any and all other claims, to the property of the first party now owned or hereafter acquired.” (Emphasis added.)
{19} In the following paragraph, the agreement sets forth the same language with reference to Elizabeth’s estate and control, with Billy waiving all rights to any property owned or acquired by Elizabeth. In other words, the agreement indicates the parties’ intent to keep separate not only the property owned at the time of the marriage, but also any increase in value or additional property each might separately acquire during the marriage.
{20} In this case, the record shows that the parties never commingled their funds in joint bank accounts and never owned real estate together. All bank accounts and stocks were maintained in each party’s separate name prior to and after the marriage. Billy’s retirement distribution was placed in his own separate account. Likewise, any funds or inheritance monies received by Elizabeth were placed in her own accounts. Since the antenuptial agreement specifically provided that each party waived any rights to each other’s property acquired prior to or after the marriage, any funds or assets separately owned by the parties, which had never been commingled, remained their separate properties. No evidence was presented that any of Elizabeth’s funds were ever commingled with or taken from Billy’s funds. Therefore, Elizabeth’s accounts, which had always been separately maintained, remained her own separate property, and no tracing was required.
{21} In addition, although Billy testified that he had paid for certain expenses related to Elizabeth’s home over the years, the antenuptial agreement specifically states that he agreed to waive any claim to property acquired after or arising “by force of” the marriage, i.e., a claim for a contribution to the appreciation of the home where the parties resided. Moreover, there was nothing in the record to indicate the exact amounts of his alleged payments or other contributions, or that they significantly affected the appreciation of the property value beyond what would have naturally occurred. We also note that at the time of the marriage, Billy owned two homes that he no longer owned at the time of the divorce. Presumably, by virtue of his living in Elizabeth’s home, he was able to sell or otherwise dispose of those properties to his advantage, with no accounting or credit to wife. Consequently, under the terms of the antenuptial agreement, any appreciation on Elizabeth’s home was separate property. Therefore, under the facts of this case, we conclude that the trial court erred in failing to designate the assets owned by each party as their separate property, not subject to division as marital property.
{22} Accordingly, appellant’s first assignment of error is well taken. In light of our disposition of the first assignment of error, appellant’s second assignment of error is moot.

II

{23} In her third assignment of error, Elizabeth asserts that the trial court failed to properly consider the factors set forth in R.C. 3105.171(F), and erred in distributing her separate property to appellee. Again, we agree.
{24} As we previously determined, the court erroneously ruled that Elizabeth’s accounts were marital because she had not adequately traced the funds. In making the property division, the court then erroneously divided and awarded a portion of Elizabeth’s assets to Billy. The court stated that Elizabeth had acted “contrary to Court Order” by “diverting” funds to the two trust accounts and to her daughter and by her failure to amend and update the initial asset list filed with her answer. Nothing in the record, however, demonstrates that Elizabeth, who relied on her daughter and financial consultants to advise her, attempted to hide or dissipate assets by placing them in trust. In addition, Elizabeth executed the trusts when no divorce proceedings were pending, on the advice of an attorney and financial consultant, and considering her age.1
{25} Furthermore, although noting that the frequent moving of Elizabeth’s funds made it “very difficult to exactly trace the past and present assets,” the court never made an actual finding of misconduct or dissipation of marital assets. In fact, the court recognized that both parties were elderly and had trouble remembering many financial details spanning their 25-year marriage. Thus, since appellant’s assets were, in fact, her separate property and within her sole control, her decision to give away money or to place some of her money and property in trust was not improper.
{26} The trial court further stated that it had considered the factors in R.C. 3105.171(F) and had awarded an inequitable distribution of “marital assets held by wife” solely because she could not trace her assets. Nothing in the final judgment indicates that the court awarded these assets on the basis of any other factor in R.C. 3105.171(F). Again, since we determined that the tracing of assets held solely in appellant’s name was not required and there was no misconduct by appellant regarding her assets, the trial court erred in distributing a portion of Elizabeth’s assets to husband.
{27} Accordingly, appellant’s third assignment of error is well taken.
{28} Pursuant to App.R. 12(B), this court hereby renders the judgment that should have been rendered by the trial court and therefore modifies paragraphs two through seven of page seven of the trial court’s divorce decree judgment entry as follows:
{29} “WHEREFORE, IT IS ORDERED:
{30} “***
{31} “2. For the purpose of making a division of marital property, the period of time “during the marriage” was from the date of the marriage through the day of the trial. The parties are bound by the terms of a valid antenuptial agreement which provided that each waived any claim or rights to the other’s property owned prior to or acquired after the marriage. After considering that the parties at all times conducted their financial affairs separately and that no evidence of commingling of funds was presented, we conclude that, under the language of the antenuptial agreement, there is no marital property to divide.
{32} “3. Wife shall keep, as her separate property, the real estate at 2332 Dana Street and any appreciation in its value. Wife shall further keep all assets, including bank accounts and stocks which are solely owned by her or in her name. Wife shall also keep her personal property to which the parties stipulated.
{33} “4. Husband shall keep, as his separate property, all funds and accounts relating to his retirement distribution, and any other assets, including bank accounts, stocks, or other funds, which are solely owned by him or in his name. Husband shall also keep his personal property to which the parties stipulated.
{34} “5. Pursuant to the parties’ agreement, neither shall pay spousal support to the other and the Court does not retain jurisdiction over the issue of spousal support.
{35} “6. Each party shall pay his/her outstanding debts, attorney fees and costs. After application of the initial filing fee(s), the parties shall equally pay the remaining court costs.
{36} “IT IS SO ORDERED.”
{37} The judgment of the Lucas County Court of Common Pleas, Domestic Relations Division, is reversed and modified as designated in this decision. Appellee is ordered to pay the costs of this appeal pursuant to App.R. 24. Judgment for the clerk’s expense incurred in preparation of the record, fees allowed by law, and the fee for filing the appeal is awarded to Lucas County.
Judgment reversed.

FOOTNOTES

1. Elizabeth testified that the trusts were set up prior to Billy’s filing of the divorce complaint on December 9, 2003.
SKOW, Judge.
HANDWORK and PIETRYKOWSKI, JJ., concur.

Prenup Planning: 5 Critical Flaws with Prenuptial Agreements

Posted on: March 7, 2017 at 7:27 am, in

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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 your current and future assets — from current real estate holdings, valuable personal property and investments to potential inheritances and other windfalls — can’t be protected by love alone.

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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 a prenuptial agreement 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, prenups have another serious drawback: 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 fiancé, 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 prenuptial agreement, 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.
Avoid the prenup talk. Protect your assets from divorce. Photo of wedding rings.
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 fiancé.
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 prenuptial agreements’ popularity, 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 prenuptial agreements 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 Joes 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 defective wording of key portions of the document that held fatal to its validity. The NY Court of Appeals early in 2013 upheld a challenge to the prenup 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, (NJ Nov. 21, 2011) The attorney representing both parties invalidated their prenuptial agreement after 20 years of marriage. 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, (Florida 2012) In this case, the prenup failed to identify any potential appreciation of separate real property as a separate asset. By default, the appreciation was deemed to be marital property. The court ruled in favor of a spouse who claimed equitable distribution of the appreciation in value of the supposedly “separate” home.
  • Jurek v. Couch-Jurek, (Texas 2009) Contrary to this couple’s prenup, the wife’s rental properties were determined to be community property. A Texas court simply ignored the terms of a prenup that identified the properties as the separate property of the wife.
Don’t take our word for it. Read here a list of 25 additional case summaries with links to full cases that show how prenups and irrevocable trusts perform in live divorce situations all across the country.

3. Protect Assets from Prying Eyes

When you create and fund an irrevocable trust, you do so in private, and you never have to disclose what you own to your spouse. By contrast, many prenuptial agreements have been invalidated because of a failure to disclose every single asset — even in the event of an honest mistake.
In Estate of Frank P. Dito, (CA Mar. 28, 2008), the Court of Appeals of California ruled that a prenuptial agreement was unconscionable because the husband did not adequately disclose the full extent of his assets. This decision was unusual because the challenge to the prenuptial agreement happened during an estate proceeding that followed the husband’s death. Despite strong evidence that the marriage was a sham to allow the foreign-born wife to remain in the United States, the court still ruled in her favor. Did she deserve to realize untold profit from an aging magnate’s honest mistake?

4. Estate Planning Tool

An irrevocable trust ensures that this won’t happen to you — regardless of the basis for your marriage. This arrangement offers a vehicle for controlling and protecting your hard-earned assets up to and after your death. Since a prenuptial agreement doesn’t survive death, it gives you no say in the ultimate distribution of your assets.
What does this mean? For starters, your spouse will probably get all of your assets to distribute as he or she pleases. If he or she wants to cut out your children completely, well, that’s perfectly legal. Indeed, surviving spouses regularly shortchange children from their deceased spouses’ prior marriages. In life or in death, an irrevocable trust ensures that your assets are distributed exactly as you choose.

5. Creditor, Medicaid, Probate, and Estate Tax Issue Planning

A properly drafted, implemented and funded irrevocable trust has numerous additional benefits. It boosts your financial and personal privacy, helps you avoid lawsuits, eliminates nursing-home costs and dramatically reduces the delays and expenses associated with probate. By transferring your assets to an irrevocable trust, you also reduce the size of the asset pool that the government uses to calculate your Medicaid eligibility.
Since it’s designed for only one thing — splitting assets in the event of a divorce, not death — a prenup achieves none of these goals.
Your assets are your legacy, and no relationship — however pure or good — is more important than that. Please use the resources we’ve provided to weigh the substantial benefits of an irrevocable trust. If you’re serious about protecting what’s rightfully yours, we’re confident that you’ll opt for a powerful trust over an easily overturned prenup.
We’d be happy to answer any and all questions on this most important matter, so don’t hesitate to call us at your convenience. If you’re ready to protect your future with a personalized Ultra Trust now, visit our partner www.myultratrust.com and get started today.
Wedding ring. Avoiding awkward prenuptial talks with your fiance. Protect assets from divorce. Set up a asset protection plan in 7 days. Call MyUltraTrust.com at (855) 219-8800.

Please visit: MyUltraTrust.com for more information on setting up your own irrevocable trust plan.

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

Posted on: March 7, 2017 at 7:26 am, in

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 upon the fact that the wife first saw the agreement on the way to the wedding and did not have an adequate opportunity to seek counsel. It is estimated that the couple spent more than $1M in legal fees contesting/defending the prenup and wife was awarded additional community property valued at millions of dollars in this case. We can only assume Mr. Bonds had the best attorneys, but he still could not get the prenup to stick.
9. C.S. v L.S., 41 Misc. 3d 1209(A), 2013 N.Y. Misc. LEXIS 4438, 2013 NY Slip Op 51624(U), 2013 WL 5526048 (New York Sup. Ct. 2013)
Prenuptial agreements are held to a higher standard than ordinary contracts because of the relationship of trust (fiduciary duty) existing between the spouses to a prenup. Courts take this trust (fiduciary duty) into consideration in determining whether one of the parties was taken advantage of because of it. This court felt the prenup was unfair because the husband had a net income of $1 million compared to the wife’s $5,000. The Court threw out the Prenuptial agreement and sent case back to trial court for determination of how much more she would get in equitable distribution and support.
10. 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 earlier 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.
11. 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.
12. Weymouth v. Weymouth, 87 So. 3d 30 (Fla. Dist. Ct. App. 4th Dist. 2012) Appreciation in value of separate property was deemed to be marital property because it was not mentioned in the prenuptial agreement. A Florida court in Weymouth v. Weymouth, ruled in favor of a spouse claiming equitable distribution of the appreciation in value of a home listed in a prenuptial agreement as separate property.
13. Jurek v. Couch-Jurek, 296 S.W.3d 864, (Tex. App. El Paso 2009) Rental properties were determined to be community property contrary to couple’s prenuptial agreement. A Texas court ignored the terms of a prenuptial agreement that declared rental properties the separate property of the wife, and, instead, declared them to be community property in Jurek v. Couch-Jurek.
14. Estate of Frank P. Dito, 2008 Cal. App. Unpub. LEXIS 2683, 2008 WL 821694 (Cal. App. 1st Dist. Mar. 28, 2008) was unusual because the challenge to the prenuptial agreement happened during an estate proceeding following the husband’s death. Strong evidence that the marriage was a sham to allow the foreign-born wife to remain in the United States did not even deter the court!

Irrevocable Trust Challenges in Divorce

15. Sharma v. Routh, 302 S.W.3d 355, 2009 Texas App. LEXIS 7945 (Tex. App. Houston 14th Dist. 2009)
Property husband received as gift of $2M which was protected when placed in an irrevocable trust from award to wife in divorce action. Court in this case ruled that neither the principle nor the income from the trust was community property and thus the wife was not entitled to any of it.
16. In re Marriage of Romano, 968 N.E.2d 115, 2012 Illinois App. LEXIS 202, 2012 IL App (2d) 091339, 360 Ill. Dec. 36 (Ill. App. Ct. 2d Dist. 2012)
Irrevocable trust used by husband to protect non-marital assets protected the assets from claims by the wife during divorce proceedings. The court went further in holding that income from the trusts were not part of the marital estate for purposes of distribution in the divorce. Husband funded the trusts valued in excess of $16 mil from sale of his business interests he held prior to marriage. He continued to run the business during the marriage. The wife got nothing.
17. In re Marriage of Holman, 122 Ill. App. 3d 1001, 462 N.E.2d 30, 1984 Illinois App. LEXIS 1639, 78 Ill. Dec. 314 (Ill. App. Ct. 2d Dist. 1984)
Non-marital assets placed in a trust by the wife were out of the reach of the husband in divorce proceeding. Interesting ruling in the case was the awarding of maintenance for the home to the wife because her access to the trust income was limited.
18. Villi v. O’Caining-Villi, 10 Misc. 3d 1060(A), 809 N.Y.S.2d 484, 2005 New York Slip Op 52049(U), 2005 N.Y. Misc. LEXIS 2811, 234 N.Y.L.J. 125 (N.Y. Sup. Ct. 2005)
Court rejected wife’s claim that home acquired during the marriage and later transferred to an irrevocable trust with husband and wife as trustees and not as beneficiaries remained marital property in a divorce. Court noted that only beneficial interest in the trust was held by the son.
19. In re Marriage of Moncey, 404 S.W.3d 701 (Texas App. Texarkana 2013)
Appellate court affirmed judgment of the trial court declaring marital home in an irrevocable trust to be the separate property of the wife. The court said there was no evidence to establish that the wife’s father intended to gift the land to anyone other than his daughter.
20. Mitani v. Mitani, 2010 Cal. App. LEXIS 7833, 2010 WL 3800590 (California App. 4th Dist. Sept. 30, 2010)
Husband lost claim to community property when the assets were placed in an irrevocable trust. The trust language removed all rights the husband had in the assets from him and his control. Court concluded that the assets, valued at $3.5M, were no longer community property.
21. Loomis v. Loomis, 158 S. W.3d 787 (2005). Mrs. Loomis, at the beginning of her marriage, set up an irrevocable trust and funded it with a life insurance policy, worth $0.09 at the time. Over the years, the value of the life insurance policy grew. The Loomis’s were married for about 10 years and filed for divorce. Mr. Loomis attempted to have the current value of the life insurance ($55,567.04) included in the marital assets. The court disagreed, because the life insurance policy was owned by an irrevocable trust that was NOT set up in anticipation of a divorce. The entire value of the trust was left out of the marital assets even though this trust was set up after the marriage!
22. Avent v. Avent, 849 N.E.2d 98 (2006). Mr. and Mrs. Avent decided to get married in 1978 and signed a prenuptial agreement saying that during the marriage their assets would remain separate. During their many years of marriage, they continued to keep their assets separate. After 25 years of marriage, they filed for divorce. Now in their 80s, their children managed their finances. Mrs. Avent, despite being a minimally paid school cafeteria worker, managed to save and invest a rather large amount of assets. Mrs. Avent, under direction of her daughter, put a large amount of Mrs. Avent’s assets in an irrevocable trust. Mr. Avent originally had the trust included in the marital assets, but the appeals court reversed and determined that since the assets were in an irrevocable trust, they were not marital assets.
24. Sharma v. Routh, 302 S.W.3d 355 (2009) Mr. Sharma was married to Mrs. Sharma who passed away, but left two irrevocable trusts to benefit her husband and children. A few years later, Mr. Sharma and Mrs. Routh were married but only for a few months. In the divorce proceedings between Mr. Sharma and Mrs. Routh, Mrs. Routh tried to have the trusts included in the marital assets. The appeals court excluded the trusts thereby keeping Mrs. Sharma’s assets safely away from Mr. Sharma’s new temporary wife.
How does an irrevocable trust work so well? Well, basically it works so well because you don’t own the assets anymore. So, when spouse X (you) gets married, X owns nothing. When X gets a divorce, X only shares the marital assets outside the trust. The trust owns everything else. In fact, X may be the one getting assets from the marriage because X doesn’t own anything on his own. All of X’s assets prior to the marriage are safe in the trust and probably grew substantially within the trust. Spouse Y can try to challenge the trust, but chances are that the case won’t go too far, because Spouse X transferred his assets before getting married. The judge will most likely take one look at the trust, determine the assets in the trust are not marital assets and remove them from the divorce proceedings.
25. Cooley v. Cooley, Appellate Court of Connecticut 32 Conn. App. 152; 628 A.2d 608; 1993 Conn. App. LEXIS 338 Timothy’s mother set up an irrevocable trust with a spendthrift clause for her son that was managed by an independent trustee. Timothy was in his second marriage to a woman named Mary. Timothy had a drinking problem and sought out help. He was at AA meetings from 3-5 nights a week. Mary was not happy that he was gone so much and filed for divorce. During the divorce, she attempted to get part of the irrevocable trust. The court ruled that because Timothy had no control over the trust, there was a spendthrift clause specifically mentioning divorce and because Mary was not a beneficiary, the trust would not be counted in the marital assets. The trust was safe for Timothy’s children.
If you have additional questions, please call us directly. If you feel that you are ready, go to our partner’s site and begin the process of personalizing your irrevocable trust now at www.myultratrust.com

Prenups: Five Things you Need to Know About Prenuptial Agreements

Posted on: February 21, 2017 at 4:24 am, in

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.
Avoid the prenup talk. Protect your assets from divorce. Photo of wedding rings.
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 of separate property was deemed to be marital property where the prenuptial agreement forgot to mention. A Florida court in Weymouth v. Weymouth, ruled in favor of a spouse claiming equitable distribution of the appreciation in value of a home listed in a prenuptial agreement as separate property.
  • Jurek v. Couch-Jurek, 296 S.W.3d 864, (Tex. App. El Paso 2009) Rental properties were determined to be community property contrary to couple’s prenuptial agreement. A Texas court ignored the terms of a prenuptial agreement that declared rental properties the separate property of the wife, and, instead, declared them to be community property in Jurek v. Couch-Jurek.
Click here for a list of 25 case summaries with links to the full cases for your detailed research showing how prenups and irrevocable trusts perform in live divorce situations all across the country.

3. Protect Assets from Prying Eyes

The creation and funding of an irrevocable trust is completed in private without having to disclose what you own to your spouse. This is in striking contrast to prenuptial agreements that have been invalidated because of a failure to disclose every single asset – even if it was a clear and honest mistake. The Court of Appeals of California ruled that a prenuptial agreement was unconscionable because the husband did not adequately disclose the full extent of his assets.
The decision in Estate of Frank P. Dito, 2008 Cal. App. Unpub. LEXIS 2683, 2008 WL 821694 (Cal. App. 1st Dist. Mar. 28, 2008) was unusual because the challenge to the prenuptial agreement happened during an estate proceeding following the husband’s death. Strong evidence that the marriage was a sham to allow the foreign-born wife to remain in the United States did not even deter the court!

4. Estate Planning Tool

Irrevocable trust’s offer you a vehicle for controlling and protecting assets while you are living as well as during the post-death distribution of the assets that you worked hard all of your life to acquire. A prenuptial agreement does not survive death and does not allow for the distribution of your assets. This means that your spouse will probably get all of your assets and then may distribute them as he or she pleases, including distributing none to your children. This can be especially tempting to the surviving spouse if the children were from a prior marriage of the deceased spouse. An irrevocable trust insures that one’s assets will be distributed to the pre-chosen people in life or in death.

5. Creditor, Medicaid, Probate, and Estate Tax Issue Planning

A properly drafted, implemented, and funded irrevocable trust helps you to increase your privacy, avoid lawsuits, avoid the costs of the nursing home, and avoids the delays as well as expenses associated with probate. Transferring your assets to an irrevocable trust reduces the size of your estate used to calculate your Medicaid eligibility as well as to reduce estate taxes and avoids probate completely.
The prenup achieves none of these goals because it is only designed for the purpose of splitting assets in the event of a divorce, not death.
In conclusion, most clients with assets to protect, who weigh all of the options after finding out the facts, risks, and uncomfortable conversations, tend to choose an irrevocable trust over a prenuptial agreement. Call us now to find out more and to get your questions answered or if you think that you know enough to start personalizing your Ultra Trust now, go to our partner www.myultratrust.com and start immeadiately.
Wedding ring. Avoiding awkward prenuptial talks with your fiance. Protect assets from divorce. Set up a asset protection plan in 7 days. Call MyUltraTrust.com at (855) 219-8800.

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