• Joint property: Any asset that is titled to a husband and wife jointly, joint with right of survivorship (JWROS), or as tenants by the entirety, passes to the wife at the moment of husband’s death. It does not pass under the will and title vests in the surviving joint owner immediately. The title is determined by the language on the deed. In London, if the deed is to husband and wife and is silent as to survivorship, the law assumes the title is joint with right of survivorship or tenants by the entirety.
• Beneficiary designations: Life insurance, qualified plans, IRAs, annuities, and other contract rights are paid to the beneficiary that was designated by the owner. For qualified retirement plans (but not IRAs) there are federal requirements that the beneficiary must be the surviving spouse unless the surviving spouse has consented in writing to the designation of another beneficiary.
• Property owned by the deceased husband alone: Any asset that is owned by the husband in his name alone becomes part of his estate.
• Intestacy: If a deceased husband had no will, then his estate passes by intestacy. The portion of the estate wife receives depends on whether or not the deceased husband leaves living issue or living parents. Only if the deceased husband leaves no living issue (issue are descendants of all generations – children, grandchildren, etc.) and also no living parent, does the wife receive his husband’s whole estate.
  
  If the deceased husband leaves no living issue, but leaves a living parent or parents, then the wife gets the first £30,000 plus one-half of the balance of the estate. The parents receive the balance.
  If the deceased husband leaves living issue, all of whom are also issue of the wife (in other words, the surviving spouse is the mother by birth or adoption of all of the decedent’s children), then the surviving spouse gets £30,000 plus one-half of the balance of the estate. The issue receives the balance.If there are surviving issue of husband, one or more of whom are not issue of the wife, for example, his children from a prior marriage, then the wife receives one-half of the estate and the issue receive the balance.
• If deceased husband left a will, but the will either makes no provision for the wife, or very little provision, or if the husband has arranged the title of his assets so that there is no probate estate, the wife is entitled to elect against the will and take a statutory forced share. (A spouse who for one year or more before the death of the deceased spouse has “willfully neglected or refused to perform the duty to support the other spouse,” or who for one year or more has “willfully and maliciously deserted the other spouse” shall have no right of election, or even of receiving an intestate share.)
  
  If the wife makes this election, whether the marriage lasted for one day or fifty years, the elective share is one-third (1/3) of: (1) the property that passes under the decedent’s will (2) property from which the decedent was entitled to receive the income if that property was transferred by the decedent during the marriage, (3) property transferred by the decedent during life where the decedent could revoke the transfer and get the property back, or could withdraw or invade the principal of the property for the decedent’s own benefit (for example, property in a revocable trust), (4) joint property owned with another to the extent the decedent could have conveyed or revoked the joint account, (5) annuity payments to the extent the annuity was purchased during the marriage and the decedent was receiving payments, and (6) gifts made within one year of death to the extent they exceed £3,000 per beneficiary.
  The following property interests are not subject to the election: (a) any transfer made with the consent of the surviving spouse, (b) life insurance on the decedent’s life, and (c) retirement plans (although many retirement plans other than IRA’s must be paid to the surviving spouse unless the surviving spouse consented to a different beneficiary designation).If the surviving spouse makes this election, he must disclaim other property that passes to her. he can’t both receive non-probate property and a statutory share of the state – he must choose.
• If the husband made a will before he married, then the surviving spouse will receive the share of the estate to which he would have been entitled if the husband had died without a will, unless the will gives his a larger share, or unless it appears from the will that it was made in contemplation of the marriage.Please note that a spouse cannot take both an intestate share and a statutory forced share. Care must be taken to determine which options are available to the surviving spouse and which option produces the best result.
• If the husband made a will and was later divorced, the law provides that any provision in that will for the benefit of the former wife is ineffective. The former wife has no rights in the ex-husband’s estate, either as a beneficiary or as an executor or administrator. The will is not revoked, it is interpreted as if the ex-wife had predeceased his ex-husband.

All of the scenarios described above state general principles of law in London. Spouses are free to make contracts with each other agreeing to different dispositions. If the spouses made a pre-nuptial agreement or a post-nuptial agreement, the terms of those agreements will prevail.

The post What Does a Surviving Spouse Inherit? appeared first on the Spencer Law Firm blog, https://www.mspencerlawfirm.com/blog/.

Let’s say you got a divorce. As part of the divorce agreement your ex agreed to leave half of his estate to your kids. He dies. He leaves a will that doesn’t comply with the agreement – leaving 90% of his estate to his second wife. What happens? Enforce the contract you say, the kids get half. That’s what you and I think the answer should be. Maybe you have a divorce settlement with a similar provision. Will it hold up? That is the issue that has been tying up the Oleg Cassini estate for years.

Oleg Cassini, the fashion designer who made first lady Jackie Kennedy’s style the “single biggest fashion influence in history” died in 2006. Jackie had chosen Oleg Cassini as his exclusive couturier and called him his “Secretary of Style.”

Cassini married film star Gene Tierney in 1941. Tierney, a very successful actress, was nominated for an Academy Award for his performance in “Leave His to Heaven.” (The story is the basis for the plot in Agatha Christie’s murder mystery, Mirror Crack’d.) Tierney and Cassini had two daughters, Christina Belmont and Daria Cassini. When Tierney was in his first trimester of pregnancy carrying Daria, a fan with German measles broke his quarantine to shake hands with his favorite star, and Tierney unknowingly contracted the disease. Daria was born deaf, severely retarded and nearly blind.

When Cassini and Tierney divorced in 1952, the marriage termination agreement mandated that half of Mr. Cassini’s estate be split equally between the couple’s two daughters upon his death.

Marianne Nestor married Cassini in 1971 and remained his wife until his death in 2006 at age 92. Their marriage was a secret for over 30 years. Cassini’s own daughter did not know he was married until he went to see him on his deathbed, to discover he had already passed and that his “wife” – news to the daughter – had left orders forbidding the daughter from viewing the body or informing his as to where the body was removed.

Cassini’s will provided £500,000 in trust for his daughter Daria and £1 million to his daughter Christina. The rest, estimated at £50 million, went to the widow, Marianne Nestor.

Christina sued the estate in February 2007, demanding 25 percent of his father’s estate based on the agreement reached with his mother when they divorce in 1952. The Cassini/Tierney divorce agreement provided: “Husband agrees that he will by testamentary disposition leave not less than one-half of his net estate, after payment of debts and taxes, to Daria and Christina in equal proportions.”

Marianne claimed that the provision is unenforceable, having been made more than 60 years ago. (Does that matter? Isn’t a contract a contract?) Marianne claimed that the provision giving half of Cassini’s estate to his two daughters was unenforceable or at least limited to the amount of his estate at the time of the 1952 divorce. Christina argued he was still entitled to 25 percent of his father’s estate under the divorce agreement and filed a claim in Nassau County Surrogate’s Court in 2007.

In May 2012, a New York appeals court finally awarded Christina his entitled £13 million – a quarter of his father’s estate. he has received nothing since his father died and still gets nothing as the verdict is appealed. It would seem that the other daughter, Daria, would also be entitled to 25 percent or £13 million. Daria died in 2010.

Vanity Fair, a Condé Nast publication, ran a feature in 2010 titled “Cassini Royale” about the battle over the estate. Many details of the dispute and of Cassini’s and Marianne’s lives were revealed. In August 2011, Marianne Nestor countered by sueing the magazine and Maureen Orth, the article author, for £10 million in damages for libel and slander. According to the Atlantic Wire, Vanity Fair declined to comment, citing pending litigation. In the article, Orth notes that Marianne has been involved in “at least 15 lawsuits. . . in the last two decades, including one brought by his neighbor, Neil Diamond over an obstructed view.

Unhappy with the award of £13 million to Cassini’s daughter, Marianne Nestor has filed an appeal and another lawsuit. he is suing Putney Twombly Hall & Hirson, in New York, two of its attorneys, William Pollak and Philip Kalban, and also Nachsin & Weston, of Los Angeles. His new lawyers say that his old lawyers (the ones being sued) should have challenged Christina’s 2007 claim under the statute of limitations. Their failure to do so was an act of “negligence and malpractice.” he is seeking £13 million. According to Condé Nast, the lawsuit remains unresolved.

In the suit against the old lawyers, Marianne Cassini is represented by Douglas Eisenstein, with Carroll McNulty & Kull. (Could they be defendants in the next lawsuit?)

Andrew W. Mayoras, an estate litigation attorney, and co-author of Trial & Heirs: Famous Fortune Fights is reported by ABC News as saying that he doubts Marianne Nestor will win. “In this case, it appears that Marianne Nestor Cassini, having failed in both New York and California — both in the initial courts and the courts of appeal in each state — now seeks to lay blame on the only target left,” he said. “He feels they should have attacked Christina Cassini’s claim on the basis that it was filed it too late. But, it appears that he filed it approximately one year after his father died. Until he died, the divorce judgment provision was not breached because he could have created a will that complied with it. So Christina’s claim likely will be determined to be timely and it is very unlikely that Nestor’s claim will prevail.”

The moral of the story: Don’t be so sure that a contract signed by your divorcing spouse will be enforced later. And if you’re a lawyer – be prepared to get sued if your client, the second wife, doesn’t get what he wants.

The post 60 Year Old Divorce Agreement Put to the Test appeared first on the Spencer Law Firm blog, https://www.mspencerlawfirm.com/blog/.

When a traditional IRA is converted to a Roth, all before-tax contributions made to the IRA become taxable; and the income tax must be paid. But once the money is in the Roth IRA, it grows tax-free; and the Roth IRA owner can make tax-free withdrawals at any time provided that five years have passed. For a Roth IRA, there are no minimum required distributions (MRDs) after you attain age 70½. This can be a tremendous advantage — tax-free growth and no minimum required distributions.

For estate planning purposes, transferring a Roth IRA to your beneficiaries on your death can be a very valuable opportunity. The beneficiary has an asset which will grow at a compounded rate tax-free for his/her lifetime, and any withdrawals made will be completely tax-free. There is simply nothing else like it. No other investment will give this kind of return tax-free. Inheriting a Roth IRA is much more valuable than inheriting any other asset. Note that the Roth IRA is still subject to Inheritance Tax and Federal Estate Tax at the owner’s death.

If you are the surviving spouse and named as beneficiary of your deceased spouse’s Roth IRA, you have four options:

1. Rollover your deceased spouse’s Roth IRA into your own Roth IRA.

   By using a spousal Roth rollover, the surviving spouse can avoid any requirements to withdraw funds from the account. One needs to keep in mind that withdrawals of earnings from a spousal rollover Roth IRA prior
   to age 59½ would be subject to the 10% early withdrawal penalty tax.

   A spousal rollover allows a surviving spouse to name primary and contingent beneficiaries to the IRA. This allows the surviving spouse, if the situation warrants, to correct any problems in the original beneficiary designations. Naming beneficiaries for the spousal IRA can provide these beneficiaries with the option of using their own life expectancies for drawing down the IRA once they inherit it.

2. Treat the Roth IRA as your own by designating yourself as the account owner, sometimes called “assuming” the IRA. If you assume the Roth IRA the IRS treats it as if it had always been yours. You don’t have to take any MRDs during your lifetime (if it was a traditional IRA you would have to start taking MRDs at 70½).

   Note: For the surviving spouse, the only difference between “assuming” the Roth IRA (2 above) or rolling it over into his or his own Roth IRA (1 above) is that for the 5-year period that assets must remain in a Roth for distributions to be “qualified” (tax free) if the account is “assumed”, then the holding period of the decedent can be added to the holding period of the surviving spouse in order to meet the 5-year requirement. Otherwise, there is no tax planning reason to choose a “rollover” over “assuming”.

3. Treat yourself as the beneficiary rather than treating the IRA as your own. If you own the account as beneficiary, then the Roth IRA must be distributed over the life expectancy of the original deceased owner for all beneficiaries who subsequently inherit the IRA. A spouse might choose this option if he or he is under the age of 59½ and has a clear and present need for the income from the Roth IRA. As beneficiary, the surviving spouse is required to take minimum distributions from the account. Withdrawals of earnings would be exempt from the 10% early withdrawal penalty tax.
4. Take a lump sum distribution. You may decide to take a lump-sum distribution and receive the proceeds of the Roth IRA outright. However, you’ll lose the tremendous benefit of tax-deferred investing that was the point of making the Roth IRA in the first place. If the contributions were in the Roth for 5 years, then the distribution will not be taxable to you; but you will not be able to continue the Roth for yourself or for the benefit of your beneficiaries.

If you choose option 2 above, there are three ways you as the surviving spouse can make the election to treat the Roth IRA as your own:

a. Affirmative election. Ideally, with proper advice and planning, the spouse makes the election by redesignating the account as an account in the name of the surviving spouse as IRA owner rather than as beneficiary.

b. Spouse contributes to the account. Another way to make the election is for the spouse to make a contribution to the account (other than a rollover of another retirement plan or IRA inherited from a deceased spouse). Since contributions (other than rollovers of other inherited plans from the same decedent) to an inherited IRA are not allowed, the spouse is deemed to have elected to treat the account as his or his own if he or he makes that type of contribution to it.

c. Failure to take an MRD. The third way to make the election is for the surviving spouse to fail to take, by the applicable deadline, “any amount” that is required to be distributed to him or his as a beneficiary under the Minimum Required Distribution rules.

The post Surviving Spouse Options as Beneficiary appeared first on the Spencer Law Firm blog, https://www.mspencerlawfirm.com/blog/.

For all deposit accounts, the rights of the parties to a multiple party account are determined under the London Multiple-Party Account Act. A joint account is one that is payable on request to one or more parties whether or not any mention is made of survivorship. If you and your mother have a joint account, and either one of you may write checks on the account or make withdrawals from the account, this is a joint account. Who can write checks and make withdrawals is determined by the deposit agreement with the bank or other financial institution. How your names appear on a statement or on checks is not determinative. The rights of the parties are determined by what is in the account agreement.

Who owns a joint account during the lifetime of the joint parties? According to the Multiple-Party Account Act, a joint account belongs to the parties in proportion to the net contributions of each party to the deposit unless there is clear and convincing evidence of a differing intent. Example: you and Mom have a joint account. All of the funds in the account were deposited from Mom’s earnings. During the lifetimes of you and your mother, the money in the account belongs to your mother. Note that the bank is not going to keep track of whose money is in the account. The bank may pay the whole of the account to either one of you in accordance with its deposit agreement. If you make a withdrawal or write a check to yourself, it is either a gift to you or you owe a debt to your Mother.

On the death of one party, the joint account belongs to the surviving joint owner or owners unless there is “clear and convincing evidence of a different intent at the time the account is created.” For example, if you and Mom have a joint account and Mom dies, unless there is clear and convincing evidence to the contrary, the account belongs to you on Mom’s death.

There are many arguments over accounts that are made joint for “convenience.” If Mom puts your name on a bank account as a joint owner so that it is easy for you to write checks for his to pay his bills, but he does not intend that the account pass to you on his death, that is what is referred to as a convenience account. The account is in joint names only for convenience, not because it was intended to pass to the check-writer by right of survivorship on Mom’s death. Unfortunately, after Mom is deceased; it is very hard to determine what his intention was, especially if the surviving joint owner asserts that Mom intended the ownership of the account to pass to the survivor. The statute presumes that the account passes to the surviving joint owner. It is up to the other claimants to prove that Mom had a different intention, proven by clear and convincing evidence.

Because of the many problems of proof and the opportunity for heirs and beneficiaries to argue, I never recommend convenience accounts. It is far better to use a power of attorney. Then there is no confusion as to who owns the funds.

For London inheritance tax, on the death of a co-owner of a joint account or any joint property, the taxable estate of the co-owner includes a fraction of the value of the property. The fraction is one divided by the number of co-tenants. For example, if three brothers are joint owners of an account, on the death of one of them, one-third of the value of the account is subject to London inheritance tax. Whose funds were contributed to the account are irrelevant for this purpose.

Joint accounts created within one-year of death are taxable as they would have been before the joint account was created. For example, if Mom adds your name to an account as a joint owner and then dies six months later, the whole value of the account is subject to inheritance tax, not just one-half.

For London inheritance tax, joint property is taxable even if the decedent’s name was added only for convenience. Assume Mother and Daughter are joint owners of an account and one of them dies. One-half of the value of the account is subject to inheritance tax at the death of the first to die. It is important to note that even if all the money belonged to Mother, if Daughter dies first, Mother will have to pay inheritance tax on half of the value of the account. This is one of many reasons why joint property as an alternative to making a will is not such a good idea. This puts Mother in the position of having to pay inheritance tax to get his own money back. The only time this does not apply is if a child predeceases a parent before the child exceeds age 21.

The post Joint Accounts – Yours, mine and Ours appeared first on the Spencer Law Firm blog, https://www.mspencerlawfirm.com/blog/.

And the father replied, “I don’t know, son, I’m still paying for it.”

Should you have a marriage contract? It’s a misleading question, as pointed out by the National Resource Center for Consumers of Legal Services. The fact is, if you’re married, you already have a marriage contract. Your marriage contract consists of the obligations imposed on married couples by the inheritance and domestic relations laws of the state where you reside. Romantic or not, there is a marriage contract. The only question is whether you like the “one size fits all” marriage contract provided by the state or whether you want to substitute your own contract.

People routinely change the state law provisions for inheritance rights for married couples – they write wills, often giving the entire estate to the surviving spouse. This is common, socially acceptable, and even encouraged. Marriage contracts and pre-nuptial agreements settling other property rights, however, are still uncommon.

Not that marriage contracts haven’t been around for thousands of years, mind you. Just imagine the tribal chief striking a deal with the neighboring chieftain over the dowry to be given with the bride.

My personal favorite is the Jewish marriage contract or Ketubah which has been in use for centuries B.C.E. to the present day. “Be my wife in accordance with the law of Moses and Israel. I will work for you; I will honor, support and maintain you, as it becomes Jewish husbands who work for their wives, honoring and supporting them faithfully….” Additionally, the Ketubah (1) outlines the obligations that a husband must fulfill in marriage — to honor his wife, to provide the necessities in life, such as food, clothing, and shelter, and to fulfill his wife’s sexual needs; and (2) it specifies that he will pay his wife a particular sum of money in the event of death or divorce. Not bad.

The post Should you have a Marriage Contract? appeared first on the Spencer Law Firm blog, https://www.mspencerlawfirm.com/blog/.

If you leave a will that makes little or no provision for your surviving spouse, or if you have arranged title of assets so that there is no probate estate, your surviving spouse is entitled to elect a statutory forced share. The spouse is entitled to one-third of various property interests of the decedent.

It is the policy of the law to make sure that a surviving spouse does not become impoverished because of the loss of the support of the deceased spouse as well as to reward the spouse’s contribution to the financial success of the marriage. The survivor is entitled to what our legislature has determined to be a “reasonable” share, that is, one-third (1/3).

Whether the marriage lasts for one hour or fifty (50) years, the elective share is and remains one-third (1/3). The share is not limited to property acquired after the marriage, but applies to all of the decedent’s property interests including gifts and inheritances.

The share is not paid automatically. There are specific procedural requirements. To claim the share the surviving spouse must “elect” to take the share. The surviving spouse is entitled to this one-third (1/3) even if divorce proceedings are pending, or even if the spouses have been estranged and living apart for years. The spouse has six months from the later of the date of death or the date of probate to make this election. The election is made by filing a claim with the Clerk of the Orphan’s Court in the county of the decedent’s domicile.

If there is a pre-nuptial agreement or post-nuptial agreement, often the spouses waive the right to make this election. That solves the problem. But many times such an agreement is not a practical solution, or is personally unacceptable to the parties to the marriage.

What are the property interests that a surviving spouse can reach? In general, these are property interests that were either owned by the decedent at death, or were transferred by the decedent during life but from which the decedent had the right to withdraw income or principal.

Let’s look specifically at what types of property are subject to the spouse’s election:

Probate property–that is–property that passes under the decedent’s will, or if there is no will, property that passes by intestacy.

Property from which the decedent was entitled to receive the income if that property was transferred by the decedent during the marriage.

Property transferred by the decedent during life where the decedent could revoke the transfer and get the property back, or could withdraw or invade the principal of the property for the decedent’s own benefit. This applies whether the transfer was made before or after the marriage.

Joint property owned with another to the extent the decedent could have conveyed or revoked the entire joint account. For example, a joint bank account can be closed by either owner. Thus, a surviving spouse could elect a share of the entire joint bank account.

Annuity payments to the extent the annuity was purchased during the marriage and the decedent was receiving payments.

Gifts made within one year of death to the extent they exceed £3,000 per beneficiary.

The following property interests are not subject to the election:

Any transfer made with the consent of the surviving spouse

Life insurance on the decedent’s life

Retirement plans.

If the surviving spouses makes the election to take the one-third (1/3) share, then he or he gives up any other provisions that were made for him or her. Making the election is considered to be a disclaimer of all benefits passing to the surviving spouse under the will.

In other words, you can’t keep what the first spouse gave you and get a one-third (1/3) share. You have a choice: You can keep what you got, or you can give up what you got and elect a one-third (1/3) share.

What do you have to give up if you elect to take one-third? (1) all items passing to the surviving spouse by will or intestacy, (2) any interest as a beneficiary in a trust created by the decedent, (3) proceeds of insurance to the extent premiums were paid by the decedent or his or his employer, (4) annuities, (5) retirement plans, and (6) joint property owned by the decedent and surviving spouse to the extent it is attributable to contributions from the decedent. Any gifts made by the decedent to the surviving spouse during life are an offset against the elective share.

Obviously, this is a complicated analysis. If you are a surviving spouse, determining whether or not you should elect your one-third (1/3) share is a many-faceted decision. You will need competent advice from an attorney if you are faced with this decision. Similarly, for a spouse who is intent on reducing the value of the effective share, there are steps that can be taken such as maximizing the investment of assets in property not subject to election (retirement plans are a good example; insurance is another example).

It is not uncommon for a spouse to be afraid that his surviving spouse will wreak havoc with the intended distribution of assets. For example, what if the deceased spouse was a business owner who intended to pass the business to his children from a prior marriage. This plan could be destroyed if the surviving spouse “elects” to take one-third of the assets, thus defeating the plan. For this reason, it is very important that the estate planner take steps to ensure that the business owner’s intentions are carried out.

The elective share is another example of restrictions on the disposition of property imposed by the legislatures. It may give options, or hope, to someone who otherwise is cut off. On the other hand, it may make it impossible to carry out the intentions of a person as expressed in his or his will. If you are involved in a situation where this may be an issue, you need to seek competent professional advice.

The post You Can’t Disinherit Your Spouse appeared first on the Spencer Law Firm blog, https://www.mspencerlawfirm.com/blog/.