Grant Rawdin, president and CEO of Wescott Financial Advisory Group LLC, in Philadelphia and Palm Beach, Fla., says he has been getting a growing number of emotionally charged situations concerning inheritances in a marriage. "It's a very powerful emotion," he says. We're seeing it more and more as more wealth accumulated from the older generation passes to their children, who are right now in their fifties or sixties and planning for their own security."
A wife will receive an inheritance, and although it is clearly beneficial for the couple's estate planning for the wife to transfer some of the assets to her spouse, she typically will refuse.
Rawdin, who also is an attorney, says that in such instances he tells his clients that he's not making a judgment but that he would like them to know all the issues involved. He might offer some ideas to get around the transfer. But even if there is nothing else that can be done, "I've not had anybody say put it (the inheritance) in both names."
Other changes to consider with clients who are married or may be getting married, according to the National Conference of State Legislatures:
A growing number of states are reducing marriage license fees for couples who complete premarital counseling. Leading the push: Florida, Maryland, Oklahoma, Minnesota and Tennessee.
More states-15 at this writing-either require classes for divorcing parents or allow courts to order parents to take these classes. Four other states, including New York, introduced but failed to pass similar legislation in 2002. Tennessee passed legislation in 2002 that allows courts to consider a divorced parent's refusal to attend education classes as evidence of a lack of good faith.
Arizona, Arkansas and Louisiana let engaged couples ask the state to enforce a higher standard of marital vows in the form of a covenant marriage. Generally, these laws require couples to make every attempt to reconcile, and provide for a much longer separation than usual before a divorce decree can be filed. Five states-Indiana, Iowa, Mississippi, Missouri and Oklahoma-introduced covenant marriage legislation in 2002.
Several states-so far, unsuccessfully-are attempting to make divorce more difficult to obtain.
Don't forget that the marriage tax penalty, which made certain married couples with similar incomes filing jointly liable for higher federal income taxes, gets some relief in 2003 and 2004. The new tax law widens the standard deduction for married couples filing jointly to double that for singles. However, experts say that couples with itemized deductions are apt to get little relief. The National Conference of State Legislatures notes that Colorado and Idaho had already eliminated the marriage penalty on state taxes, and that Arizona, Arkansas, Idaho and Missouri eased tax burdens for married couples.
And Westfall suggests that you start thinking seriously now about the implications of new reproductive technology for your clients' estate plans. You want to make sure it's clear in your clients' legal agreements, for instance, that assets left to a grandchild should include-or exclude-offspring from donated eggs or sperm.