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Love & Money: POSTnuptial Agreements
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A postnuptial agreement is a contract between spouses. It is similar to a prenuptial agreement except it is signed during marriage to protect assets in case of divorce or separation.
Prenuptial agreements get plenty of press when high-profile divorces happen, such as the media frenzy over golfer Tiger Woods and his marital troubles. But postnups can be seen more positively as a reset button to accommodate wealth that’s accumulated since the marriage or as a way to add transparency and correct past money behaviors that were tearing the marriage asunder. In some cases, this kind of “divorce planning” might actually create harmony in a relationship.
Under what circumstances are postnups written? Triggers could include:
• One partner -- or both – handling money poorly.
A postnup might be used to force full disclosure on both sides and establish a new system for managing money responsibly in the future.
• The building of a significant business or other acquisition of sizable assets.
A postnup could be part of an overall financial and estate review for a couple that’s worked hard to start a business together or inherited wealth. They might want to set certain protections in place that weren’t in existence when the couple married or started the business.
Postnups can be expensive to arrange. Both sides generally need to engage separate legal counsel to review the legality of the document as well as coordinate with accountants and tax and estate attorneys. They may even delve significantly into business operations as well, requiring an examination of strategy of valuation and succession planning.
If you and your spouse are considering whether a postnuptial agreement is right for you, it makes sense to talk with a legal advisor who specializes in Family Law. If the problem is money, it’s best to talk through options with an objective professional who handles financial planning for a living. It might be possible to work out those issues without a need for a document that will take significant expense to produce due to the need for attorneys as well as tax and estate professionals.
Some common questions to ask in preparation of a postnuptial agreement:
What problem are we trying to fix or what behavior are we trying to change?
This is the central question when trying to remake a financial life. A legal professional can help a couple determine the root causes for the financial issues they’re facing and determine how much support they really need. This will help both sides come to the table with disclosure of debt, assets and other business, employment and investment issues of relevance.
What about our families?
Minor and adult children are part of any new financial agreements you make during your marriage. If there’s a family business at stake, there needs to be a discussion about how a postnuptial agreement will affect a split of assets that might affect their future inheritance or career options. There may be alimony and other support arrangements already in place for ex-spouses and children from earlier marriages as well as elderly parents to support. All of these financial requirements need to be part of the discussion.
Is there debt?
If so, how much? If one or both sides in the marriage have been hiding this information, disclosure is part of the process. Both sides must be willing to reveal their savings, investments and debt figures – every dime. Both should start the process of talking about how that debt should be paid off – by the person who accrued it, or by both potential spouses. Couples also need to decide how they will handle debt going forward – jointly or separately.
Are there investments?
Again, this might be a disclosure issue, particularly if one or both sides are hiding assets or simply have lost track of them. There might also be wide differences on how investments should be managed and even what types of investments are appropriate.
What about the business?
If one or both spouses run their own companies or partnerships and there has never been a serious effort at succession or estate planning, all of these efforts need to be linked. If there is a fear that the marriage may fail, both sides may want to have a plan in place for disposition or purchase of the assets. This is particularly necessary if the goal is to keep the company in the hands of the founding family so those assets can be passed on to the next generation.
What about everyday expenses?
If one or both sides believe that certain expenses are a burden, it’s time to talk about reallocating responsibilities. This might be as simple as consolidating bank accounts in both names so there’s transparency over everyday finances.
What about insurance?
Life, health, home, and disability – all coverage that single people hold separately should be reviewed and consolidated to make sure that coverage is adequate going forward.
What about our estates?
There should be separate wills and supporting documents on who will get what investments, personal and business assets with updated beneficiaries – particularly when children from first marriages are involved. This new look at finances might benefit from an examination of various trust agreements to protect and direct assets for future generations, particularly for blended families or families that might blend after a breakup. And no matter how young or old the couple, healthcare directives need to be made.
What about retirement?
Retirement discussions go beyond money. Couples should decide how they want to live in retirement, whether they’ll continue to work and how they’ll deal with illness. This is a particularly important discussion if one spouse is significantly older than the other and may retire years ahead.
When done correctly, a postnuptial agreement can benefit both spouses. The very process of working on this arrangement can be a positive exercise for many couples. Whether or not the marriage ends in a divorce, couples can breathe easier knowing they can protect what they each own. |
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Medical Tourism:
What to Know
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The latest Deloitte Center for Healthcare Solutions report on Medical Tourism projects renewed growth in medical tourism in 2010 as the economy recovers.
The reasons? Consumer pocketbooks will be able to better withstand trips for non-emergency care outside the country. Also, it’s believed that more insurance companies will eventually agree to fund procedures at international hospitals that win extensive accreditation. The consulting firm division’s 2009 report predicts that the number of people leaving the United States for various procedures will reach 1.6 million by 2012. That’s more than double 2007’s numbers.
Medical tourism used to be all about cosmetic procedures – hiding the occasional facelift or tummy tuck from prying eyes back home. But today, the rising number of underinsured or budget-conscious patients has made going abroad for medical care much more prevalent for more complex procedures such as knee or hip replacements. It’s also getting the support of domestic insurers and the American Medical Association, which has set nine guidelines for patients and medical travel.
But before you hop on the plane, it’s best to do significant due diligence of financial and safety issues related to the procedure and the hospital where it would be done. First, check and see if your insurer supports medical tourism and makes its own recommendations on where you might go for certain procedures. Insurers like Aetna, WellPoint and BlueCross BlueShield of South Carolina have tested foreign facilities in their physician and hospital networks, arranging one-stop shopping for overseas treatments including care, travel and lodging for patients and their families.
But whether your insurer offers these options or not, the first step is researching the institution. The primary way to do that is to consult Joint Commission International (JCI), a division of the leading U.S. organization that reviews hospitals for quality, now provides similar services to hospitals abroad. JCI provides an online list of accredited hospitals and medical centers worldwide. (In fact, even if you aren’t planning a trip strictly for a medical procedure, the JCI list is a good one to use when planning a vacation – it will help you determine the best hospitals abroad if you need emergency care.)
But learning about good overseas hospitals is just the first step. Consider the following:
Include your doctors: Don’t assume your doctors are automatically going to veto your thinking. They may help you find the right program, particularly if you’re having trouble affording procedures here at home. Compare the cost of a qualified facility overseas to a negotiated price for treatment here – always ask if you can get the care cheaper in the U.S. first.
Whatever happens, the discussion shouldn’t end at where you should go for overseas treatment – if there are complications or a need for aftercare, it’s very important your doctor be involved.
Check your employer first, then your insurer: If you are insured through your employer, start with human resources to get an overview of where your various plans stand on overseas medical coverage. Disclosure is best. If an insurer doesn’t endorse treatments at a particular hospital, it’s likely going to be tough to get them to cover any problems that could crop up domestically after overseas treatment. Ask them how – or if --they would deal with post-care complications. Also, if you have long-term care insurance, check in with them to find out if getting treatment overseas could potentially risk your coverage when you need to draw on it later.
Get some money advice: If you are planning a non-emergency procedure that won’t be covered by insurance, take the opportunity to see how such a move will affect your overall finances. It makes sense to talk to a financial advisor to weigh this expenditure – which may still be in the tens of thousands even at a sizable discount – against your other financial needs and concerns.
Designate a family member as your primary contact: Choose a family member, friend, or health power of attorney (more on this below), to keep in touch with your family, friends and employers you designate they call. This primary contact should also be prepared to pay bills and deal with the unthinkable – if you suffer complications or die outside the U.S.
Make sure your health care directives work where you’re going: A health care directive – also called an advance directive – specifies your medical wishes in case you’re incapacitated. They come in two forms: the living will and the power of attorney for health care. The living will indicates specific wishes about medication and life-support treatment if you’re incapacitated, and you need to refer to your own state laws on how these documents need to be written. The power of attorney for health care – also called a durable power of attorney for health care -- also specifies your wishes for treatment but allows you to designate a specific person to act in your stead if you are incapacitated. You should check with the hospital where you’ll be doing the procedure as well as your attorney about what documentation will be effective where you’re going.
Pick your representatives wisely: Your health care power of attorney may or may not be the person with the power to disburse your assets if you’re incapacitated, but that person should have their name on a joint checking account in case bills need to be paid. Also, make sure you have a line of credit established that your designated representative can access in case of emergency. Make sure all these sources of cash can flow easily to the foreign country where you’re recovering.
Update your estate matters: No one expects they’ll die in the hospital, but it’s necessary that your will be up to date so your spouse or designated executor can step in immediately to handle your affairs. Again, it makes sense to see whether anything needs to be amended based on out-of-country care.
Have an up-to-date disaster plan: If you are incapacitated or die, it makes sense to have all critical papers and data in one place so your health care power of attorney, your executor or a trusted friend or family member can access them. Include the following with an index:
• Full details on administrative contacts and physicians at the hospital where you’re undergoing treatment (and money set aside for your health power of attorney if they have to travel to you);
• Birth, death, marriage certificates (with 10 copies each in case they’re needed for estate purposes); Your passport information in case they have to contact the U.S. Embassy for any reason;
• List and location of all household bills that must be paid with due dates;
• Divorce decrees with all relevant settlement information;
• Location of wills, trusts and any power of attorney information;
• Advanced healthcare directives;
• Adoption papers, if applicable;
• Key identification numbers, including drivers’ license, Social Security, passport and employee identification data;
• Recent bank and brokerage statements;
• Detailed funeral and burial wishes;
• Location of cash that may be used to handle other emergency expenses;
• Copies of recent medical records in case you’re incapacitated;
• Copies of deeds for primary home, vacation and investment properties;
• Car title, lease, loan information and license plate data;
• Insurance policies (health, disability, life, auto, long-term care) with agent contacts;
• Photocopies of credit and debit cards, front and back (displaying individual’s signature);
• Current copy of individual’s home financial software program reflecting up-to-date financial data;
• All password information necessary to get inside any computers, and handheld devices;
• Locations for all investment documents;
• Notes on house maintenance and service providers;
• Where safe deposit, lockbox and filing cabinet keys are;
• The name and number of your human resources department at work;
• Location of tax returns for the last three years;
• All relevant contact numbers for executors, financial advisors, trustees, guardians, attorneys and any other individuals who will need to step in if you are dead or incapacitated;
• All user IDs and passwords for online accounts;
• Guidelines on what to do about orphaned pets, including set plans for who will adopt them and pay for their care;
• A general statement of family origins, values, and hopes for future generations, including what you want for children in the way of day-to-day parental guidance as well as aspirations.
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John Hayman, CFP
Founder and President
Email John |
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Donna Zinman, MBA
Senior Financial Advisor
Email Donna |
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Gary Clarke
Senior Financial Advisor
Email Gary |
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Rick McNamara, CFMC
Director of Investments
Email Rick |
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Dawnalizabeth Henke,
MBA, MSFA
Chief Compliance Officer
Email Dawnalizabeth |
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Catherine Norris
Service Advisor
Email Catherine |
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Aimee Schwartze
Director of Client Service
Email Aimee |
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Amy Montano
Office Manager
Email Amy (AJ) |
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