Divorce not only throws a family into emotional turmoil but it creates many questions and decisions to be made that have enormous consequences in the future. Separating and providing financially for children from spouses is generally the first thought. However, additional thought needs to be given to future children and future spouses and how your estate will be distributed. Robin Williams from first appearance did estate planning right. His financial wealth did dictate some of his planning. He set up a trust to own his real estate, a Napa Valley mansion for sale at 29.9 million and a waterfront home in Tiburon, CA for approximately $6 million. This is generally done to minimize estate taxes but it also removes the real estate from the taxable estate. It also appears that he set up a trust with equal distribution for his three children. He then lattered the distribution from the estate to the children at the ages of 21, 25 and 30. This is a smart and savvy way of not giving everything to the child at once. Should he/she “blow” the first financial distribution due to youth and immaturity, it is hoped for the additional distributions to be handled more prudently. The age is at your complete discretion, perhaps 21 is too young for your son or daughter. You may also consider designating a trust for the distributions to preclude the assets from future spouses of your children.
Here are some additional tips you may consider when determining your estate planning after a divorce:
Priority one, is double checking all financial instruments that have had a “beneficiary” designated. When there is a beneficiary designation this supercedes the will, therefore it is possible for an asset to be transferred to a prior spouse outside of your will. This would include life insurance, IRA’s, Transfer on Death account designations, property beneficiary deeds, etc. (Some states have made laws revoking bequests to a prior spouse but you will not want to leave that to chance).
Take into consideration, while being married, your estate tax exclusions was double what it will be as a single person. Talk with a professional estate planner if your assets are in excess of $5.34 million.
“DIY” probably not a good idea when a divorce is involved. Although a do-it-yourself will is better than none at all, it would be wise to seek professional counsel in ensuring your estate planning is done right.
If one parent or the other has full custody of the children, careful thought and guardianship decisions should be clearly defined in your estate plan. If your ex-spouse is not an appropriate caregiver you may need to provide detailed information as to why they would not be suitable for the court to consider in the future.
If you remarry, a prenuptial agreement should be considered to safeguard the prior assets of your marriage to your children and family, if that is your wish.
Certainly every estate has unique challenges. Careful and extensive thought needs to be given to all assets, collections, future earnings such as oil and gas royalties, and relationships, family dynamics. Outline every consideration prior to meeting with an estate attorney. Do not rely on them to provide all your answers without knowing all the details and the only way they will know all your details is through the information you provide them.
Your final gift will be a sound plan allowing your family to grieve and not be concerned with financial issues.
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