To the surprise of everyone in the estate planning community, Congress failed to address a critical estate and generation-skipping tax matter before the end of 2009, resulting in the repeal of the federal estate tax.  However, this repeal is for 2010 only.  In 2011, the exclusion for federal estate tax reverts back to $1,000,000.  How is this possible, and what effect does it have on couples’ estate plans, particularly second marriages?

Since 2001, the federal estate tax has been gradually phasing out, with an increasing exclusion from federal estate tax each year.  In 2009, the exclusion increased to $3,500,000. In 2010 however, the federal estate tax disappears, only to return in 2011 with only a $1,000,000 exclusion.  To further complicate things, although the federal estate tax disappears in 2010, the unlimited step-up in basis for inherited assets also disappears; and a decedent’s estate is permitted to increase the basis of assets by only up to a total of $1.3 million with an additional $3 million if there is a surviving spouse.  How does this affect estate planning?

Many couples’ estate plans were written to shelter the exclusion at the death of the first spouse by using a “by-pass” or “shelter credit” trust, and having the balance pass to a spouse (in trust or outright)  or possibly to the children of a first marriage.  Under the current law, the credit shelter trust may be either underfunded or overfunded or, in 2010, not funded at all because no exclusion amount applies.  With estate plans for second marriages where often an individual wants to provide for both a spouse and children from a first marriage, if nothing is allocated to the credit shelter trust (for the benefit of one group of beneficiaries) then everything will go to the remaining group of beneficiaries, and the result may certainly be something other than what was intended.  In 2011, when the exclusion is no longer unlimited but reverts back to $1,000,000, a completely different but equally problematic group of issues arise, also possibly resulting in an estate plan other than what was initially desired.

If you have a trust or trust language in your will, you need to be aware of these issues.  You should have your estate plan reviewed by your estate planning attorney, particularly if your immediate health is an issue, to make sure that it effectuates your intentions and wishes.  It also does not hurt to try to follow this topic in the news.  Congress will eventually address these issues, probably either this year or next.  We just don’t know when or what will be the end result. Stay tuned to our blog and we will report any new developments!

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Lately, it seems that I have had more and more of my male clients coming in to see me to discuss issues relating to paternity.  There are so many myths out there about what needs to happen to establish paternity and the possible outcomes of failing to do so, that it never ceases to amaze me!  Perhaps the most serious outcome that many people are unaware of is that a “putative” father can have his child adopted out to someone else without his consent if the appropriate action has not been taken.

In Ohio, a person is presumed to know that if he has had sexual relations with a woman and she becomes pregnant that the child may be adopted without the father’s consent once the child is more than a month old.  As a way to counteract this result, the Ohio State legislature mandated the creation of the Ohio Putative Father Registry.  The purpose of the Registry is that a person who believes that he may have fathered a child can now establish the legal right to be notified of any hearings where the mother either voluntarily or involuntarily gives up custody rights to the child.  The “putative” father may register at any time during the pregnancy up until thirty (30) days after the birth of the child.  After that point it is too late.

This Registry only applies to people who are unmarried and in situations where the father has not established paternity.  If the father is married to the mother and a child is born, he is the legal father of the child absent some other Court determination. If an unwed person establishes paternity, then the “putative” father becomes the “legal father”.  That father is then a necessary party to any proceedings involving custody or adoption of the child.

If paternity has yet to be established, the first step to protect your rights is to obtain a Putative Registry Form either online or by calling the Ohio Department of Job and Family Services.  This form will ask for your name, current address, and other personal information for both you and the mother.  In the event that you do not have the entire mother’s information you should do your best to fill out what you can.  Likewise, if the child has not yet been born, you should give an estimated date of birth based on when you believe the date of conception occurred.  You must then sign and have the form notarized in the presence of a Notary Public.  Once the form is completed, it must be mailed in to the Ohio Department of Job and Family Services, and be received by them no later than thirty (30) days after the birth of the child.

Once you have submitted the form, it is your responsibility to update the information anytime you move.  Additionally, this is not a one-time deal.  Placing your name on the Registry once will not cover you for other children.  What this means is that if you have additional relationships with the same woman, or with other women, you must complete an additional form each time to properly be placed on the Registry.  There is no cost to the person for filling out and completing the form.

For a link to the Ohio Putative Father Registry online registration document, please click here, or call 888-313-3100.  If you want to obtain more technical information about the Registry, click here to read the Ohio Administrative Code section about it.

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In a recent analysis of census data, the Pew Research Center found that the institution of marriage has undergone significant changes in recent decades as women have outpaced men in education and earnings growth. The study examined American’s 30 to 44 years old, a stage of life when typical adults have completed their education, have gone to work and gotten married. “Men now are increasingly likely to marry wives with more education and income than they have, and the reverse is true for women,” said Paul Fucito, spokesman for the Pew Center. “In recent decades, with the rise of well-paid working wives, the economic gains of marriage have been a greater benefit for men.” Clearly, these unequal gains have been accompanied by gender role reversals in both the spousal characteristics and the economic benefits of marriage.

I personally enjoy reviewing statistics. For those that don’t, be sure at least to read my conclusion at the end of this piece, especially if you are a woman contemplating entering into a marriage.
Here are some of the significant findings in the study, clearly demonstrating the new economics of today’s marriage:

• In 1970, 28% of wives had husbands who were better educated than they were, outnumbering the 20% whose husbands had less education. By 2007, these patterns had reversed: 19% of wives had husbands with more education, versus 28% whose husbands had less education.
• Only 4% of husbands had wives who brought home more income than they did in 1970, a figure that rose to 22% in 2007.
• The national economic downturn has hurt employment of men more than that of women. The income gap has grown even more in the latest recession, when men held about three in four of the jobs that were lost. Women are moving toward a new milestone in which they constitute half of all the employed. Their share increased from 46.5% in December 2007 to 47.4% in December 2009.
• Women now are the majority of college graduates. Their earnings grew 44% from 1970 to 2007, compared with 6% growth for men. That sharper growth has enabled women to narrow, but not close, the earnings gap with men. Median earnings of full-year female workers in 2007 were 71% of earnings of comparable men, compared with 52% in 1970.
• Unmarried men’s household incomes fared worse than those of women. Unmarried women in 2007 had higher household incomes than their 1970 counterparts at each level of education. But unmarried men without any post-secondary education lost ground because their real earnings decreased, and they did not have a wife’s wages to buffer that decline. Unmarried men who did not complete high school or who had only a high school diploma had lower household incomes in 2007 than their 1970 counterparts did.
• There is an important exception to the rule that married adults have fared better than unmarried adults from 1970 to 2007. Married women without a high school diploma did not make the same gains as more educated women: Their household incomes slipped 2% from 1970 to 2007, while those of their unmarried counterparts grew 9%. The stagnant incomes of married women without high school diplomas reflect the poor job prospects of less educated men in their pool of marriage partners. These less-educated married women now are far less likely, than in the past, to have a spouse who works — 77% did in 2007, compared with 92% in 1970.
• Among college-educated adults, married men are markedly more likely to have a wife who is college educated — only 37% did in 1970, compared with 71% in 2007. College-educated married women, though, are somewhat less likely to have a college-educated husband — 70% did in 1970 and 64% did in 2007.
• Americans are more likely than in the past to cohabit, divorce, marry late in life or not marry at all. There has been a marked decline in the share of Americans who are currently married. Among U.S.-born 30- to 44-year-olds, 60% were married in 2007, compared with 84% in 1970.

To read the full study, which includes many more findings along with excellent graphs and charts, click here.

CONCLUSION:

In my practice, I am seeing these “gender reversal” situations almost every day. It is not at all uncommon for divorced women to be ordered to pay spousal support to their ex-husbands. Also, men’s previous reluctance years ago to “accept” spousal support has seemed to have changed as well. I don’t hear, “I am a man and I don’t need any woman to support me”, like I once did. Yes, perhaps it is a good time for a reprise of Bob Dylan’s “The Times They are a-Changin”!

Another trend is that more women contemplating marriage are recognizing the benefits and importance of obtaining a well-written prenuptial agreement before they “tie-the-knot”. As many men had been doing for decades, we now see these successful women trying to protect themselves and their assets in the event of a subsequent divorce.

To learn more about Prenuptial Agreements, click here. I had the pleasure of being interviewed by “Big George” on BBC London radio in July 2009, to discuss the use of Prenuptial Agreements in America. It was lots of fun! Click here if you want to check that out!

I am also in the process of writing a follow-up article indicating how the local statistics in the Dayton area support the results of this Pew Research Center study. Keep an eye out for it!

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One of the most difficult things you will ever have to do as a parent is tell your children that their parents are breaking up. It is important that you shift your focus from your loss to your children’s loss. Divorce is about the dissolution of a husband-wife relationship. It marks a change in the parent-child relationship. Staying aware of this difference will help you effectively support your children. In talking with your children, stay focused on their feelings about this experience. If you focus on the spousal relationship, your own feelings may get in the way of good parenting.

Here are some tips for explaining the divorce to your children:

• If possible, both parents should be present. This illustrates to the children that you will still be able to co-parent.
• Tell them close to the time that one of the parents is planning to move out. Telling them months in advance doesn’t “prepare them.” It will only make them anxious and worried.
• Tell them calmly.
• Keep it age appropriate. Don’t give them information that is over their heads.
• Keep it short and sweet.
• Explain that divorce is between the adults and that parents do not divorce children.
• Ask for questions. Answer honestly with age-appropriate information. Don’t be afraid to say, “I don’t know the answer to that. When I do, I will tell you.” You don’t tell your children about marital issues, like your sex life or money problems. The details of divorce should also stay between the two of you.
• Explain to your children the ways the divorce will affect them directly, i.e., will you move, will they stay in the same schools, and so on.
• Remember that divorce begins for the children the day the living situation changes. On the day one parent leaves, that is the day their parents’ marriage ends.
• Allow for your children cry if they need to. It is important to let them grieve.
• Reassure them that you will not leave them, even if you are angry (which is some children’s biggest fear).
• Reassure them that you will always love them.
• Notify their teachers, scout leaders, karate instructor, and anyone else who has contact with your child, so they can be aware of and sensitive to your child’s needs.
• Be prepared for any and all reactions from, “that’s too bad, what’s for dinner?” to crying and yelling. Stay calm and be reassuring.
• Remember your children will be as healthy about this as you are. They will take their cues from you.
• Behave yourself! Keep your thoughts and feelings about your spouse to yourself. Recent research shows that it isn’t the divorce itself that damages children as much as the fighting, stonewalling, tension and icy silences between the parents.

Continue to talk with your children about the process. As it is with discussions about sex or drugs, you do not just have one conversation and feel you have done your job! This conversation is only the introduction. An ongoing dialogue and open attitude will go a long way in minimizing possible negative effects. Be there for your children through this difficult time. As uncomfortable as this may be for you, your children need your guidance and support.

Donna F. Ferber, LPC, LADC is a psychotherapist in Connecticut who works with families in transition. This article is adapted from her book, Ex-Wife to Exceptional Life: A Woman’s Journey through Divorce which was awarded Honorable Mention in the self-help category by the Independent Publishers Association. Her second book Profileactics: A Guide for the Prevention of ill-Conceived Personal Ads was just published in October 2009. For more information, click here to go to her website.

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Jason C. Brown, the publisher of the Minnesota Divorce and Family Law Blog, recently posted a very practical article outlining some important steps to take if you are anticipating filing a divorce action. I am grateful that he has allowed me to repost it here. I concur with his wise “nuts and bolts” type suggestions. Remember the old adage, “An ounce of prevention is worth a pound of cure”.  Plus, this “ounce of prevention” might well save you thousands of dollars in attorney fees!

Once you break the news of your desire to dissolve your marriage, interesting things may start happening at your house. Critical records and valuable items of personal property may suddenly vanish. It pays to be proactive to ensure that you have all the information you will need to move forward as efficiently as possible.

The wasted time and cost associated with hunting down missing documentation can be staggering. We’ve handled cases where everything from an expensive diamond ring to boxes of business records have taken a “vacation”. We almost always find them, but not without substantial effort. In cases where they are not found, the Court will impose substantial sanctions and assume the missing evidence is favorable to you.

To help avoid the mess, we’ve assembled a list of 12 things you should gather to ensure that you have all critical information in hand before your spouse has a chance to conceal, transfer or sell items. These include obtaining:

To help avoid the mess, we’ve assembled a list of 12 things you should gather to ensure that you have all critical information in hand before your spouse has a chance to conceal, transfer or sell items. These include obtaining:

Investing some time in gathering these items will ensure that your spouse cannot take advantage of you during the divorce process. The denial of the existence of an asset is a fraud upon the Court. Once your spouse knows that we have all of the key information in hand, they are far less likely to engage in bad faith conduct and be honest in their disclosures throughout the process!

If you believe that it is prudent in your case to copy a computer’s hard drive to preserve information, be sure you have a qualified professional undertake the task. It is very easy to accidentally run the “ghost drive” backwards and, in so doing, wipe out the original hard dhard drive! Not good at all!

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