Must Do's at Separation When separation and divorce are contemplated, these steps should be carefully considered with benefit of counsel: Insurance- Change beneficiaries to insurance
- Subject to disclosure to divorce court
Avoid Waster by Spouse- If insurance for benefit of minor, designate trust in control of third party to protect children
- Former spouse who may be primary guardian
- Consider Gift to Irrevocable Education Trust
Exception to divorce equitable distribution: - special circumstance such as education fund for children to protect against spouse with addictions
- gifts to irrevocable trust for children dedicated to educational expenditures
| Durable Financial Power of Attorney Powerful and dangerous tool in spouse hands which may allow pilfering bank and investment accounts Individual Retirement Accounts - Upon the death of the owner, the value of the account will be payable to the beneficiary
- Changing to third party accelerates income tax
- Retirement Equity Act [REA] adds automatic pre-retirement survivor spousal benefit; also see Employee Retirement Income Security Act [ERISA]
- Contrary public opinion IRA are not subject ERISA or REA but pensions from employer-sponsored qualified retirement plans are subject to both laws
- Review of Shareholder Agreements or Buy/Sell Agreements
- Typically provide "buy-out" if one party involved in divorce
- If there are significant negative consequences that will ensue if a complaint for divorce is filed, a renegotiation of the shareholder's agreement might be warranted.
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