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SMART MONEY: Prenuptial agreement protects investments

on July 21, 2013 2:50 AM

DEAR BRUCE: I am a 61-year-old widow who is planning to remarry. How do I protect my investments?

I live in California, which is a community property state. I have gone through too much to lose it all in the event something goes wrong with my marriage or if something happens to me. I do have a Living Trust. Does this have to be changed? — R.O., via email

DEAR R.O.: Addressing your last question, I doubt seriously if you will have to change the trust, but it depends. You will need to have an attorney in California look over the trust to see what it provides and to whom.

As to your primary question, you’re a perfect candidate for a prenuptial agreement. In a prenuptial, both parties put aside certain parts of the law. For example, you mentioned that California is a community property state, which means your spouse gets half if you decide to split. That’s obviously something you want to obviate.

You will both have to agree, and you both need separate attorneys. You must be absolutely candid about everything you put into the prenuptial agreement; all things of value especially have to be noted.

After that is done, each party agrees to whatever you guys can agree to. What’s yours is yours, what’s his is his, and there will be no separation of any property acquired prior to the marriage. However, anything that is acquired during the marriage will probably be split.

DEAR BRUCE: I was joint owner with right of survivorship on a number of CDs. The owner died and the CDs were transferred to me. The owner was a friend, not a relative. Was I obliged to pay inheritance tax to the state? — Reader, via email

DEAR READER: This is one of those cases where I strongly urge you to talk to someone who deals in tax matters. You should also investigate inheritance tax that may or may not be due to the state since the owner was only a friend and not a relative.

It doesn’t take very much to trigger a state tax. You didn’t indicate how much money is involved. If it’s a relatively minor amount, it won’t be a problem. If there’s a lot of money, there could be some taxes that need to be paid. I wouldn’t even take a shot at this without knowing some more specifics and the appropriate laws in your state.



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