Submitted by Christopher S. Nudo on
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Hello and welcome so glad you joined us here today. My name is Chris Nudo and I am an attorney in Illinois with offices in Arlington Heights and Elgin our practice focuses on estate planning probate. real estate. and business transaction law. We have worked with many churches and not for profits over the year as well and it is. Pleasure to spend a little bit of time with you here this morning and going over a topic that I know is near and dear to more than 50% of the people that are watching today. So. let's just jump right in shall we our topic today is how do parents from mixed marriages. deal with their estate plan, which would go with that would be like your will or your trust things of that need. As it relates to distribution of property. to your children from different marriages, so it's a great topic. We know that today in America the divorce rate still hovers over 50%, which means that more than 50% of the clientele that comes and I work with are coming in. not with the original marriage, not with their first marriage, not with their second, sometimes even their third and there are. From each one of those marriages and we need to dissect evaluate and properly plan for those types of families so let's just jump right in. so a little one of one of our agenda items for today is. key areas in which to consider when planning un. From four children for your children in a mixed marriage and we need to have some definitions. regarding mixed marriages and marital assets as it relates to Illinois. now if you're watching this video and or you're watching it live this morning with us. And you live in Wisconsin or. Arizona, California, or any other state that has a community property law with regard to marriages much of what I'm going to tell you today. does not apply but in Illinois we are a separate property state and what is separate property Estate mean what it means is if. You are married. all the assets that you brought to the marriage or better, said acquired before the marriage as long as you keep them separate, meaning you don't comming them in the marriage and we'll spend a minute discussing that and if you inherit any property that you keep separate and do not combing goal, then. the property that you brought to the marriage that was not comming and the inheritance that you kept separate. even if you are. At the time remain separate and these assets are not considered marital property. so let's talk about the concept of separateness so it's easy to use examples to define this stuff First if you come to the marriage with. A big savings account and it's just in your name. and you do not add your spouse or partner as a joint owner on the account, Then that account is separate, however. if you add your spouse. Account now it's comming. If you take the money out of your savings account, put it in the joint checking account between you and your spouse, it's comming. so separate really means separate. Comming means where your spouse has. equal access to the asset. Now that we've defined that. People from separate marriages know people from mixed marriages tend to have many assets that they are bringing to the marriage that they acquired either in their first marriage or sometime prior to the marriage that they are in and if there are children. from the first marriage second marriage third marriage, depending on which marriage you're on and you have children from each one of those marriages. Segregating and keeping separate property and how you. how you treat those children are going to need to go through various. considerations. So. Now, One of the things I wanted to talk about was. Do you always need to treat each child equally? And the answer is no. In our example this morning, we will say that a wife has two children from her first marriage. and that a father has two children from his first marriage and the two of them have a child together. so there are five children. four from the White four from each husband and wife's first marriage to a piece and one together. Some considerations when that couple comes to me and we want to do discuss estate planning well, the first let's talk about the children. The current husband and wife have together that's one child. That one child has one mother and one father to care for that child and so when planning for that child we do a simple analysis of if mom and dad are not there. What is available for that child in the way of inheritance. We don't necessarily quantify that at the moment we just identify that there's one set of parents that'll be available to help that child in any way or fashion growing up and raising them into adulthood. Versus let's talk about now the children from the earlier marriages first, we'll go to the wife We we we discussed in our example that the wife had two children from her first marriage. and. what what do we know well in our example, we can speculate that the father of those children still exist is working and is a productive person in society. and we will. This example assume that the father has his parents around and. are are productive people in society and we have mom and so what we find is that the children from the first marriage end up having a larger. influence or larger scope of people. who are. available to care for. Children from the first marriage because there is an existing father, there is now a stepfather there are parent grandparents on both sides of the equation and so there's more people who have the ability to step up and care for these children from the first marriage. on the husband's side. it may not it may or may not look exactly the same. For example, The husband had two children from his first marriage, but his first marriage did not end in a divorce, but he is widowed. then the mother of his children from the first marriage is no longer. available to provide. As you can tell from this little example that I've described it's very complex it requires analysis at the nuclear level. of each family unit and the analysis of. what parents are still alive. What parents are capable of providing what are the family values of each one of those parents? What are? Assets or the socioeconomic status of each one of those parents. How big is the family if we reverse this entire example, and we say that the current married couple has four children naturally born between the two of them and just the wife brought one child from a previous marriage This analysis completely changes because now we have four children. And that have just the one mom and dad to care for them and raise them to be productive people in society and we have only one stepchild for the husband and one or one child from the previous marriage the whole analysis still needs to be done and needs to be evaluated to determine what resources are available out there for each child. but. because we now have more children born of the current marriage versus the previous. Example the analysis now will we have more heavily on the the current children and less on the stepchild. So, During none of this time have we discussed. how once we have this information and we've done the analysis and we determine the need how do we effectively plan? for the death of a parent? well first? I'm going to say that trying to do this Planning efficiently and effective. With wills in Illinois is very difficult now, we can definitely craft the language in a way we can make accommodations for different children from different marriages taking into consideration Assets, resources and other family members that we just discussed but the likelihood is we will end up in the Illinois Probate Court and trying to. Manage and administer this is Estate through the Illinois Probate Court where there is many children from mixed marriages and many parents. can be an administrative nightmare both in time and in cost. If we don't want to have to handle it through our court system and probate, we don't want to use a will, but rather we want to use some other vehicle the most popular vehicle in Illinois to deal with these things are living trust. Now, if you've watched some of my other videos. you know that the living trust is an estate planning asset that does all the functionality of the common will, but then does so much much more and the very thing that it is known for in Illinois is a tool that avoids probate. and so. When we start planning. for people who are. a mixed marriage situation with children from other marriages as well as children from the current marriage Living trusts are that the tool of choice. now we need to bring this all together. because. in many instances in a mixed. We have separate property, which is what we started this discussion with we have mixed or comming or jointly held property from the current marriage. When we mix the separate property. the property children from prior marriages and children from the current marriage. This requires an extensive analysis. to to and diagram to ensure that. we prepare the adequate estate plan that protects all interests. First of all, let's start with this. in many instances, but not all. We plan these types of situations with individual trust. not joint trust again a little definition. And an individual trust means that a husband has his own trust and a wife has her own trust This gives us the greatest flexibility. in Planning. on each side of the family. versus a joint trust, which is one trust. for the husband and the wife together. this limits our Planning ability. Now, note, I say, usually because there are many instances in mixed marriages where I will use a joint trust. and briefly those examples are where the assets that keeping the assets separate. is less important. but. Let's go to our individual analysis so the husband wants to take care of his children from his prior marriage, The wife wants to take care of her children from her prior marriage and together husband and wife wants to take care of their current children. Lots of children. So how do we do this? well the beauty of using individual trust is that the we can design the husband's trust so that. Cares for his children as well as his wife as well as his current child with his current wife. When. done appropriately. There's no risk Being this inherited so let's talk about that for a quick moment. One of the big concerns. is that. A child from a prior marriage can lose their inheritance. This could be intentional or unintentional. happens every day. How does this happen? well? Mom and dad. their marriages fail either by divorce. or because one of the parent dies. their surviving parent goes ahead and gets remarried. At some point that surviving spouse might die. leaving. the step parent as the survivor. as the surviving spouse. the surviving spouse. typically does not recognize the children from the prior marriage or does not value as greatly the children from the prior marriage. so then when he or she does her estate plan. They may not include. The children from the prior marriage and again, this can be intentional many times unintentional, but the fact of the matter is without the proper planning that child just. Was this inherited which I can tell you from talking to many children who were. left with nothing when their parents. died as a result of mixed marriages. It's a very hurtful event. So if we do the proper planning. and we put protections in place so that new spouses, whether intentionally or unintentionally don't have the ability to exclude children from prior marriages then we have accomplished the necessary goal of making sure that a child doesn't get dis inherited. Now people ask me do distributions have to be equal, meaning if I have a child from a prior marriage, my wife has a child from a prior marriage and we have a child together and that those three those three children each have to get a third of our estate and the answer is no. because. your child from the prior marriage supposedly has a another parent and grandparents, aunts and uncles. So often times we will leave a greater amount of the assets to the child that is born of the current marriage and a little less to the children from the prior marriages now. Is that always the case? the answer is there are times We're treating them equally one third a piece would be fine. Also in my earlier example, if the husband was widowed and which means that the child from the first marriage no longer has a mother, then that's even a greater reason to treat that child from the prior marriage, the same as the child from the current marriage. It's very important when designing an estate plan. that takes into consideration children from multiple marriages. that protections are put in place. so that changes to the documents later on down the road don't have an effect of this inheriting a child so in many instances I will make trust irrevocable. at the. Of the parent so husband and wife each having children from prior marriages. when one of those parents die I now make their their trust or estate plan completely irrevocable, meaning cannot be changed. and I also limit the exposure of the current assets to the surviving spouse. so. At no point to surviving spouse can completely liquidate the state. and thereby just inheriting the child from the first marriage always put protections in place. for not only the current family. but the prior families. Well, that's been kind of. II hope my zig zags with our family here. have not been too Confusing. II recognized that at some point a whiteboard and some beautiful stick figures might have been helpful but hopefully the concepts resonated with you today, especially if you are watching and you do come from a mixed marriage with children from prior marriages. So, let's just do a quick recap here first of all for those who joined a little late. My name is Chris Nudo. I am an attorney in Illinois with offices in Elgin and Arlington Heights My practice really focuses on estate planning real estate and basic business transaction law. The topic we've been discussing this morning is how parents with children from two different different marriages handle the distribution of assets and we've talked about a number of considerations including how did the first marriages. What is the asset make up? What is the family dynamics? What are what are some of the family values. What is the size of the family and how many children come from what marriage these all being part of part and parcel of an analysis that really needs to be done. prior to your estate plan being done. So then we can establish not only the right vehicles for your estate plan, but also how we're going to. The estate plan to protect those children from prior marriages. we've had a number of questions that came in today and I want to just take just a minute or two and review a few of them with you. We really appreciate your participation with us. The first question came in is what is the best way to equally divide assets or property among children from two marriages and I touched upon this already and that. Is you don't have to equally distribute those assets you need to do an analysis of what each child has available to them as a result of their family and from what marriage. and then you can appropriately up the assets and they do not have to be equal. what you the equality that you're trying to build is an equality as to access. So if a In the previous marriage, if the previous marriage came from a lot of money and the that. family has great chance for inheritance, then there's going to be less concern about the the child from the previous marriage as it would versus the flip side of that equation, which would be the child from the previous marriage comes from the very disadvantaged position and now the nuclear family is very advantage socioeconomic and so what. This is the evaluation and analysis that needs to be done when deciding how we're going to distribute the assets and remember we're looking for equality not equal. Alright second question. How can I approach this discussion with my ex spouse? Wow? Okay. So I'm not really qualified to answer this question because I have I don't have an ex spouse but. And and and and and what I do recognize is not all marriages that have failed. The ex spouse's cordial with one another, but let's assume, for example, they are cordial with one another which would be ideal for the children from that marriage. Then I believe it's very important to have a frank discussion about how they are going to treat their child in their estate planning documents are they going to leave x amount of their Estate to that child? How are they going to do it and? How does that in its totality? create a sense of equal or fairness to that child as it relates to the broken marriage between their families. so I would say if you can have that discussion with your ex spouse, it is for the benefit of your child. Alright, let's see what else we have here. Are there considerations for continuing alimony payments in an estate plan? See I'm not a I'm not a family law lawyer. What I do know is this alimony payments need to be made no question about it. and. should I take alimony payments into consideration when planning my estate. Yes and no. The yes would be. Are you carefully considering? a spouse or ex spouse? who might have the burden and cost of raising your child? If you die. will that be a harmful impact on your ex spouse's ability to raise that child. If you say, yes and you care. Taking alimony payments into consideration in your estate plan. Would be a noble idea? How would you accomplish this? you would not do it by having your Estate continue to pay alimony not in Illinois, but what you would do is you may go out and purchase a life insurance plan a life insurance policy that gets paid. for the benefit of your child from the first marriage. as a way of making up for what would ultimately be lost alimony payments if you die. And that is very common. so having an insurance policy in place just in case you die to care for that child as if it was an alimony payment continuing is a very popular and I think wise concept. May I add that I also see it often in court ordered but again not being a family law lawyer, I can't really speak much more in detail about. Up Do you run into issues dividing life insurance benefits between two families? I run into issues where dividing anything is an issue between two families life insurance, particularly is a good example life insurance, though is just another asset in the Estate mix and so. the plan and analysis that we did with regard to the size of the families. What children come from what marriages what assets are available and all of that plays into. And would equate to the division of assets, including possible life insurance proceeds. What's the best way to start working with an estate planning lawyer Well the best way is first to get as much information as you can with regard to your family. So you're coming from AA difficult family situation where there are multiple from a children's perspective there are parents. there are there are. And there are step parents there are grandparents and there are step grandparents. There are aunts, there's uncles. There's all kinds of family. There's brothers and sisters all that didn't necessarily. all appear as part of the one family unit. It's multiple family units and you need to analyze what family unit has what advantages and disadvantages as a result of size socioeconomic status. etcetera. Once you've analyzed this, then sitting with an estate planning lawyer, we can evaluate discuss and come up with an equitable distribution. No, I didn't say equal distribution but an equitable distribution. What's the difference between working with a lawyer and doing all the paperwork myself online? well? This is a very good question. The very simple answer is if you have if you come. from a situation where your first marriage or second marriage have failed and you have children from those earlier marriages and you are now remarried and you possibly have children with the current marriage or maybe you don't but nonetheless, none of these. real-life situations can be. Adequately addressed in any kind of automated online program. I don't care if you're using into its program legal zoom law depot. I mean I could name dozens of them and Google will glad to serve them up for you Zero None of these programs are able to adequately deal with the complexity of your life and the complexity of mixed marriages. None. All it takes a human interaction with knowledge and the ability to effectively evaluate all of the issues and so the only way you're going to do that appropriately and well is by working with an estate planning lawyer who has lots of experience in these areas and is happy to spend the time with you to ensure that when you're done with this plan it represents exactly. What you want to have happen for everybody in your primary current marriage children from each etcetera. Somebody wants to know do I offer virtual appointments? I do I mean, is this not. post COVID pandemic. I mean. Am I real and I virtual you know I mean I get the opportunity to meet with people. face to face. I have the ability to meet with people over Microsoft teams and zoom. just over the phone you know my job is to meet with people where they want to meet and so yes I do offer virtual appointments as well as in person appointments and it's it's my honor each time I get to do something like that. So where can I contact you to set up a consultation Well, you know the the bottom of my screen will be displaying my phone number my phone number to text. You know, give these numbers a call talk to the myself and the folks in my office and the we can answer questions we can set up appointments for consultations and at the end of the day, our job is to make you comfortable. that we have your best interest and your family. In mind so I want to really thank you for spending some time with me this morning, I cherish the opportunity to work with you and your family Your legacy is one of the most important things that you will leave behind and I believe it's very important that you take the time and plan it adequate that when you are gone it your legacy is a representation of the good person that you are. Like anything in life, you know, estate planning is a process and it takes some time not too much time, but you know get it started now there is a point where it's too late when you've died or become incapacitated, We no longer have the privilege of being able to help you so while you're still doing well start this process get a hold of us. learn a little bit about it and let us help you plan that legacy. Listen I invite you to join. Here every other week to talk about various topics about your life and your family and specifically around the topic of estate planning feel free to invite your friends Family coworkers and please share this video with them if you found it helpful in any way I hope to see you here again. Stay well and God bless.
