I am married to a man that has 2 grown-up children from his previous marriage, and I am a little worried about my finances if he dies before me. Who will inherit his 401K, Roth IRA, and his CALPers? I am not really comfortable asking him about this things, because I don't want him to think that I am after his money. He may have named his children as beneficiaries. I know he named his children as such on his life insurance policy, and I am ok, with that. However, I am a little worried about growing old poor if he dies before me and if the children get the retirement benefits, such as the 401K, Roth IRA and CALPers.
Thank you! Gabi
These are things you need to have a frank and open discussion about with your husband. It is a reality of life that must be faced. Your future is important and you need to talk about it with him. Or else you could find yourself in dire consequences.
Michael is in San Jose, California and can be reached at 408-295-4232 or at [email protected] Consultation fees, rates and retainers vary based on need and ability to pay.
First, your question can't be properly answered in a few sentences. Best to set up a personal consult with a local lawyer to discuss all the relevant facts and your rights on such an important matter.
Second: you should absolutely talk to your husband about these issues, including your concerns about your financial situation after his death. You should discuss all assets (community and separate). Not having an estate plan (or not knowing your husband's) is unwise. Frankly, not discussing these issues with your spouse seems strange. If you husband would suspect nefarious intentions on your part by discussing this topic, then perhaps there is something amiss with the marriage. If that is the case, then there is nothing to lose by discussing this issue now, which can avoid a much bigger problem down the road if he dies and you have no estate plan and no knowledge of the community and his separate assets.
Third: Unless you have a premarital agreement (which you didn't mention in your question, so I'm assuming not), then his retirement accounts (401k's, and CALPers) have been, and will be accruing a community interest during the marriage.
Based on how you worded your question, it seems as if these retirement assets existed before your marriage. If so, then there is both a separate portion, and a community portion.
here is also the consideration of whether and how these assets were divided from the prior marriage. I.e., did your husband's ex-wife take any share of these assets via the prior divorce judgment or agreement? If so, did the parties carry out such terms?
Finally, the 401k's will likely have a "payable on death" ("POD") beneficiary designation. If you are named as the sole beneficiary, then you can take not only your community share, but also your husband's community and separate share.
Again, I strongly suggest that you call a local lawyer to learn more about your rights relative to these retirement assets and your estate planning needs.
I agree with the other responses. In addition, I would add two points:
1) Retirement assets that fall under Federal ERISA laws would pass to you, unless you have signed off on those accounts. You could also agree to waive your rights under a Pre-nuptial agreement. If you have not done that, then the 401K would likely pass to you. Not sure about CalPers. The Roth would likely pass to the designated beneficiaries. You SHOULD confirm this with your lawyer.
2) Both you AND your husband need to adjust your estate planning, in light of your marriage. If you set things up before marriage and have not changed anything, then state law could significantly alter the terms of your estate plans, if you do nothing. Also, in light of the marriage, it seems likely that your objectives may have changed. You will want to reflect your intent in updated documents. For example, BOTH of you should have general durable power of attorney forms for health and financial matters. Otherwise, it will be up in the air who would act for you, if either one of you become incapacitated. You might need to fight your husband's children in order to make decisions for him or to handle his finances. It seems at least plausible that you would want to name each other to make these decisions.
If this is handled properly through an estate planning attorney, there does not need to be any question about anyone "going after" someone else's assets. It can be structured simply as a clarification of past documents and a new expression of intent, in light of the changed circumstances.
This should be done while both of you are in good health and can think clearly about what you want to have done.
*** LEGAL DISCLAIMER I am licensed to practice law in the State of Michigan and have offices in Wayne and Ingham Counties. My practice is focused in the areas of estate planning and probate administration. I am ethically required to state that the above answer does not create an attorney/client relationship. These responses should be considered general legal education and are intended to provide general information about the question asked. Frequently, the question does not include important facts that, if known, could significantly change the answer. Information provided on this site should not be used as a substitute for competent legal advice from a licensed attorney that practices in your state. The law changes frequently and varies from state to state. If I refer to your state's laws, you should not rely on what I say; I just did a quick Internet search and found something that looked relevant that I hoped you would find helpful. You should verify and confirm any information provided with an attorney licensed in your state.
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