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Blended Families: How to Protect Your Assets

The legal boundaries that once defined marriage and family have gradually expanded over the years. These changes have made marriage and parenthood more inclusive and also more complicated. Marriage is now an exciting option for any couple who wants a full family life. It’s often a challenging option as well. It’s not unusual for a new marriage to create a blended family that includes newborns, stepchildren, multiple dads, and more than one mom. With so many shifts in obligations and responsibilities, some couples decide that it makes sense to protect their separately acquired assets rather than combine them. 

If you’re on the verge of creating a blended family, it probably feels natural to want to share your financial advantages. As you must consider your future, it also makes sense to retain some of your assets and take steps to protect them. It’s important to finalize a financial plan before you settle into your new household. You and your future spouse must decide if and how you should protect your assets and what you need to do to ensure your desired outcome.  

Attorney‌ ‌Steven‌ ‌M.‌ ‌Bishop‌‌ ‌understands‌ ‌that‌ it’s important for couples to address financial issues before they begin a new marriage. As‌ ‌a‌ ‌Certified‌ ‌Specialist‌ ‌in‌ ‌Family‌ ‌Law,‌ he’s seen what happens when couples fail to establish financial ground rules. Attorney Bishop believes that if you plan ahead of time, you can address your finances and begin your new family with one less complication. Here are a few things to consider.

1. You Should Consider a Premarital Agreement

In California, premarital agreements help you formalize your financial decisions and protect your assets. As you are entering what you likely anticipate will be a long-term relationship, you should try to make the process as stress-free as possible. California Family Code, Division 4, Part 5, Article 2 establishes the guidelines for premarital agreements. The codes give you a great deal of flexibility to create an agreement that works best for you, your partner, and your family.  Premarital agreements allow you to determine what happens with current and future interests in real and personal property. This includes current and future income and earnings.

2. You Must Be Open and Honest

To create a premarital agreement that accomplishes your goals, you must include financial arrangements that satisfy both parties. This requires openness, sharing, and honest communication about your financial concerns. Before you begin negotiating your agreement, gather all documents that confirm your real property, income, investments, retirement benefits, and other assets. Full disclosure is key to establishing an agreement that satisfies both spouses and holds up in court. Premarital agreements are generally enforceable, but they are revocable under these and other circumstances. 

  • One of the parties didn’t execute the agreement voluntarily
  • The agreement was unconscionable, as defined under §1615 
  • One party didn’t have full knowledge of the other party’s assets

3. You Must Consider Every Member of the Family 

Marriage and family are no longer the narrowly-defined institutions they once were. In determining what ultimately happens with your assets, you must consider everyone within your family circle. California Family Codes give marital relationships and domestics partnerships virtually the same status. A legally married couple can be a man and a woman, two women, or two men.

The parent/child relationship has gone through classification changes as well. Adults can become parents through natural childbirth, adoption, guardianship, or assistive reproduction. California’s Uniform Parentage Act further expands family options by declaring that a child can have more than two parents. Exes, grandparents, and others gain legal rights and responsibilities based on a person’s “presumed” parenthood status 

Once you enter a legal partnership, you become bound by California Family Codes. Before you make any family-related decisions about your assets, you must understand and consider the rights and responsibilities of each parent for the children in your new blended household. 

4. You Must Consider The Children’s Best Interests

If a family comes before a California Family Court, the court makes decisions based on the child’s best interests. California courts accept most premarital agreements as they are written as long as they don’t adversely affect a child’s right to financial support. 

5. Change the Appropriate Supporting Documents 

As divorce, separation, and remarriage sometimes occur, you can’t ignore the possibility of future changes in your blended family. That’s why your life insurance policies, wills, trusts, and other accounts and financial instruments must mirror the terms of your premarital agreement. If you plan to insulate accounts and financial instruments from being considered part of your community estate, you must make the appropriate changes. 

  • Change policy and account beneficiaries, where allowed.
  • Consider choosing a neutral, unrelated party as the executor of your will. 
  • Before you acquire real property, consider whether you wish to include your spouse as a joint owner. 
  • Set up a living trust with a trustee to enforce decisions according to your instructions.

6. Complete Your Premarital Agreement and Sign it

Your premarital agreement can’t just be a work in progress. You must formalize it in a properly executed format. Your goal should be to complete your agreement and sign it in time to become effective on your wedding day. To make sure your agreement fills all legal requirements, you should have a legal professional create the final version and retain a copy. You can save legal fees if you work together and establish the terms of your agreement ahead of time. 

Contact The Law Offices of Steven M. Bishop

Life gets complicated when you’re establishing a household that blends two families. While you’re planning a future for your new spouse and children, you must consider every alternative for yourself. Whether you want to finance your ongoing lifestyle or plan for your golden years, protecting your assets is a prudent move. 

Attorney Steven M. Bishop has worked with couples experiencing every stage of marriage. He has helped many clients through the legal challenges they encountered during marriage and divorce. He recognizes the benefits of protecting your assets to ensure your future. As you prepare to form your blended family, contact Attorney Bishop if you need more information about protecting your assets. To schedule a consultation, call us at (619) 299-9780 or complete our Contact Form.

 

Community Property Rights in California for Unmarried Couples

According to statistics published by the Pew Research Center, nearly 60 percent of adults 18 to 44 have lived with a partner without being married. Reviewing the statistics as they pertain to younger generations, more are opting to live with partners outside of marriage which has become more acceptable over the past few decades. While the percentages of adult who have lived together is still quite low, around seven percent, this still means there are concerns about property rights for many people.

Common Law Marriage: No Longer the “Rule”

Colorado, District of Columbia, Iowa, Kansas, Montana, Rhode Island, South Carolina, Texas (calls it “informal marriage”), and Utah all fully recognize common law marriage. Other states including Georgia, Idaho, New Hampshire, Oklahoma, Ohio, and Pennsylvania have specific “cut-off” dates on when the couple began their live-in relationship. California, however, does not recognize common law marriages in any form, which means community property division rights are not recognized. All other states, some of which had previously established legally recognized common law marriages, have abolished them.

Exceptions to Community Property Rights for Unmarried Couples

As with many legal questions, there are exceptions to community property in California, even when a couple is not married. Some of these include:

  • Jointly held credit accounts — even after a breakup is finalized between couples who are living together, any joint accounts where both parties signed for the debt leaves both parties responsible for such debt.
  • Jointly held real estate — if the parties purchase real estate, or other real property, during the time they are living together, assuming the property ownership documents reflect both names, then both parties are considered owners. The parties would have to agree on how to divide such property.
  • Cohabitation Property Agreements — these agreements are similar in nature to a pre or postnuptial agreement with the exception they are not made between a couple who is contemplating marriage, or already married. These agreements can be extremely beneficial to both parties.

Financial Support After Living Together

There may be specific instances where one partner in a non-marital relationship seeks financial support following a breakup. This support is known by the non-legal term of “palimony” which in effect means non-marital partner support. While one partner may be financially responsible to provide for any child or children born during the relationship through the payment of child support, non-spouse financial support is much more difficult to obtain in California.

Some people will recall the legal case Marvin v. Marvin. This case made the argument that unmarried partners may receive the equivalent of spousal support in the event the relationship ends. However, that does not necessarily mean such financial support is automatic, nor is it necessary easy to prove it is warranted. In general, financial support of a non-spouse after a long-term live-in relationship ends involves filing a lawsuit claiming the right to support. The courts will look at the same data they would review in the event a spouse was seeking alimony following a divorce including:

  • Assets and income of both partners
  • Marketable skills of the person requesting support
  • Whether the person required to pay can afford to pay
  • What standard of living the parties enjoyed as a couple
  • How long the relationship lasted
  • Whether the person requesting support helped support the other’s career or education
  • The age and health of the involved parties

Keep in mind, there is no absolute right to financial support for a non-spouse partner in California. However, if you believe you may have a case for non-marital support, it is best to speak with a family law attorney who can help you determine if you may have a case for filing a request for support.

Why Cohabiting Agreements Make Sense

Like a pre or postnuptial agreement, many couples are reluctant to enter into any agreement pertaining to finances as they feel it is a signal their relationship will not last. However, this type of agreement can be especially helpful for couples who are living together without the benefit of marriage for numerous reasons.

When couples live together, chances are they are both bringing certain assets into the relationship. To ensure the assets remain their sole possessions in the event the relationship deteriorates, it is helpful to have a document which describes such property. These types of agreements can help ensure your personal property remains your own.

Additionally, a cohabitation agreement can be helpful for long-term relationships even when the partners do not decide to separate later. For example, if a couple moves in together and they are together for numerous years, and one dies, the remaining partner has no rights as far as the estate of the other partner unless one of two situations exist (a) there is an agreement which the partners entered into or (b) the deceased partner’s will specifically bequeaths property to the surviving partner.

Family Law or Estate Planning Firm

When you are involved in a long-term relationship without the legal benefits of marriage, you and your partner should discuss how you wish to deal with financial matters in the event one of you loses your life or if the relationship should deteriorate. This is simply a smart thing to do and a step that protects both parties.

Many of the issues you will face, which are similar to those issues faced by married couples, including financial support and property division in the event of a breakup can, and should, be resolved prior to the deterioration of a relationship.  This process will protect both partners in a long-term relationship.

If you are entering into a relationship with another person, and you are interested in learning about the ways you can protect yourself either through the use of a cohabitation agreement, or by an estate plan, you should take the time to learn what protections can be obtained under California law. You can learn more about your options by contacting The Law Offices of Steven M. Bishop at (619) 299-9780 and setting up an appointment with an attorney who can help you understand your options. For more than four decades, Attorney Bishop has been committed to helping area residents with some of the most complex legal issues they are facing regarding family law and estate planning.

Estate Planning During the COVID-19 Crisis in California

This may seem like an unusual time to consider your estate plan. However, if you do not have a Will and/or Trust or if the estate plan you have has not been updated within the last 5 years, it may be the perfect time since you may be at home and following the Governor’s recommendations for remaining safe and healthy during the COVID-19 crisis. Too often, decisions about our estates are put off until there is an actual health emergency. In most cases, that means you may be too late to effectively address the issue. We can help you set up an effective estate plan, even during the crisis which is currently gripping California, the United States, and the rest of the world.

The most important reasons to consider an estate plan are to save time and money. Should you pass away without a will or a trust in place, your family could be tied up for months while the court determines the status of your assets and decides the proper way to distribute those assets. This process is known as “probate” and can cost thousands of dollars. This is not necessary and could put your family in serious financial jeopardy, particularly if you are the primary breadwinner.

Gathering Your Documentation and Thoughts

This is a perfect time to look at your investment portfolio, review your retirement accounts, and consider what assets need to be distributed in the event of your death. This can help avoid problems among family members and loved ones, at a time when they are already mourning your loss.

This is also a good time to consider as the right plan for your specific estate planning needs. Whether you have an extensive investment portfolio, multiple pieces of real estate or a very simple estate involving only your home, a few personal treasures and your retirement accounts, your plan must be customized to meet your specific circumstances.

What Estate Planning Tools Are Suitable to Meet Your Goals?

Before your estate plan is put into place, it is important to understand the tools available to meet your needs. The most common estate planning options include:

  • Wills — for those who have a simple estate, a Last Will and Testament may be all that is necessary. Simply put, a will directs a specific person, known as the executor of your estate, to distribute any non-retirement or life insurance benefits to one or more beneficiaries of your choosing. For retirement plans and life insurance policies, you should check your beneficiary designations and make sure you have the beneficiary you want on file.
  • Trusts — if you have a more complex estate, a Revocable Trust may be more suitable. There are different types of trusts which can be designed to meet your specific needs. For example, if you have a family member who will need financial support after your death and you wish to contribute to that support, a special needs trust can be established. We can discuss your unique situations and help you determine the type of trust right for you and the needs of your family.
  • Powers of Attorney — Most Powers of Attorney lose their authority upon your death. However, prior to your death should you become disabled or incapable of taking care of your own financial or health matters, these documents are extremely important. We can help you make sure these issues are addressed and someone you trust is making decisions on your behalf.
  • Advanced Health Care Directive — you are entitled to make your own health care decisions pertaining to your care. However, if you are incapable of communicating these decisions, you need to make sure they are in writing and someone is aware of your wishes. We can help you craft the appropriate documentation to ensure your wishes are fully executed in the event of your disability or inability to communicate.
  • HIPAA Release — this form is required when you turn over healthcare decisions to a third-party. This release allows your medical team to discuss your health, your medical care, and your prognosis with someone you direct.

Anyone considering an estate plan, regardless of the timing should also be aware there are significant differences in your estate plan whether you choose a will or a trust. While a Will becomes part of the public record after your death because it must be filed with the Probate Court, a Trust keeps all your financial information private.

It is also important to note having a trust is almost always a much faster way to settle your estate since it does not need to go through the courts. We have had clients who have opted to use a trust because it is more effective, timelier, and in some cases, much more cost-effective.

Another part of an effective estate plan is tax planning. We can work with you to help minimize the amount of taxes which may be part of the distribution of assets from your estate, leaving more to your loved ones.

Estate Planning During Lockdown

We know this is an unprecedented time. While we normally schedule estate planning sessions in our office, we also understand the importance of remaining safe and healthy during the COVID-19 pandemic. We can help you feel safe by discussing your estate plan using modern technology. We can schedule all appointments via teleconference using secure technology.

Once we have your full plan in place, we will provide the relevant documents for review and make sure they meet your expectations. We will discuss any changes you wish to make and, if necessary, forward revised drafts, at no additional cost to you.

For those documents which require notarization, we will be prepared to have our local notary visit your home (taking proper precautions) and have all documents properly notarized. We are taking all the necessary steps to keep our clients safe

Please contact me, Steven M. Bishop, Attorney at Law and Certified Family Law Specialist, if you would like to get the ball rolling on your estate plan. In addition, you may contact me if you have any questions pertaining to an estate plan and why now is the right time to design a plan which works best for you and your family. Thank you for your consideration.

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Discuss Your Case With An Experienced Family Law Specialist

To talk to our lawyer about your family law issue in a free telephone consultation, please call our office at 619-299-9780. You may also send us an email. We represent people throughout San Diego County in a host of different family law matters.

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The Law Offices of Steven M. Bishop, Attorney at Law, A California Corporation


591 Camino De La Reina, Suite 700

San Diego, CA 92108

Phone: 619-299-9780

Fax: 619-299-0316

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