After sitting with one of my doctor clients this past weekend, I was surprised to learn he felt “trapped” in his marriage and was terrified to proceed with divorce from his beyond disgruntled wife to dissolve their long-term 21-year marriage.  He like many of the breadwinner spouses I counsel, he lives by the credo ‘its cheaper to keep her’ because of his fear of divorce drama, stressed out children and giving up a share of certain jointly owned real estate and business assets to his spouse.

While my doctor’s primary concern was preventing his spouse from ending up with ownership and control of his medical practice and certain related investment property if he is deceased or disabled, I suggested my doctor first prioritize transitioning any non-joint/non-tenants by entireties assets to his children free from potential gift and estate tax liability.  Secondarily, I suggested my doctor make lifetime gifts to his children to reduce his taxable estate and the potential pool of marital property assets to be divided in the event of divorce.

While my client’s unhappy spouse has certain legal rights to recover a share of assets from my client’s probate estate upon his death, i.e. by way of election to receive a 1/3^rd elective share of the physician’s elective estate upon his death, I offered the following recommendations to further his estate planning goals and alleviate any burden of his marriage trap, i.e. and convey ownership and control to the adult children and limit the ownership share and control over client’s estate assets that SS will receive:

1. Name adult children as attorney-in-fact and healthcare surrogate by way of General Durable Power of Attorney and Living Will, respectively

2. Execute a Last Will with Pour-Over to family trust with adult children named as PR/successor PR and expressly disavowing SS from serving in said capacity

3. Settle a family trust, i.e. Credit shelter trust with provisions with adult children named as successor trustees, allowing for SS to receive her statutory elective share funded by non-business liquid assets from client’s estate

4. Settle an Irrevocable gifting and educational trust to reduce client’s potential taxable estate by gifts of $15K per child

5. Gift $15K cash directly to each child income tax free thereby minimizing the pool of marital property upon incident of divorce

6. Have adult children and their gifting trusts loan money back the client’s income earning businesses such that the company’s pledges its stock/membership units to the daughters as security in exchange the business loan