Neil Carbone Discusses How Trust and Estate Planning During Marriage Requires Transparency with MarketWatch

Trust and estate planning during marriage requires transparency and careful consideration. Neil Carbone shares his insight with The Moneyist on MarketWatch on navigating complex marital and estate matters.

“This is a situation in which a prenuptial agreement could have been helpful to confirm — and protect — the rights of each spouse in the event of divorce or death,” says Neil V. Carbone, a partner at Farrell Fritz, P.C. “State law governs a spouse’s inheritance rights. Most states provide a surviving spouse with a minimum ‘elective’ share, that is, the right to take a share of a deceased spouse’s property regardless of what a will or revocable lifetime trust agreement provides.”

“The idea of the elective share is to avoid the complete disinheritance of a surviving spouse, so ‘no contest’ clauses are ineffective to defeat the demand for an elective share,” he adds.  “What goes into the elective share ‘pot’ will vary from state to state. For example, in New York, life insurance is not included in determining the elective share. Some people may seek to defeat a spouse’s elective share rights by transferring property to an irrevocable trust, but they generally must survive a look-back period in order for the transferred property to be excluded.”

“Many people are surprised to learn that 401(k)s and IRAs are treated differently,” Carbone says. The former are governed by the Employee Retirement Income Security Act of 1974 and, typically, a spouse must consent in writing to have someone else named as beneficiary, he adds. “IRAs are not governed by ERISA and the spouse’s consent is not required to designate a non-spouse as a beneficiary.” If your husband did forge your consent on a 401(k) beneficiary designation form, you should act ASAP.

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