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Matrimonial and Divorce Advisory Solutions
Our experts in our National Matrimonial/Divorce Advisory Practice work closely with attorneys and other trusted advisors on coordinated services for those who are impacted by divorce. Our goal is to provide the guidance, resources, and insights you and your clients can rely on to make the process as smooth as possible.


Watch Our LinkedIn Live Stream: How to Stress Test a Divorce Plan

Our divorce planning experts Sharon Klein and Christy Watkins discuss ways to stress test every divorce plan so your clients can be well-positioned for the future. Click the double arrows below the video to view it in a full screen.


Click here to view Questions & Answers that arose during the LinkedIn Live Stream.

For more information about how we can assist with the complexities of divorce and premarital planning, please contact Sharon Klein.

Sharon Klein and Christy Watkins Answer Questions from: How to Stress Test a Divorce Plan

Click the below questions to view Sharon and Christy’s responses.

 

ANSWER: No, getting an in-force illustration is not the same as a policy review. While an in-force illustration can provide important information, a thorough policy review should be completed by an outside, neutral, expert organization (not the broker who sold the insurance). This type of review encompasses whether the policy is performing, an analysis of the strength of the insurance company, whether the type of policy is still appropriate having regard to factors like whether the health of the insured, market conditions or the original goal in purchasing the insurance has changed, comparisons with different options to check if premium amounts/death benefits are competitive in the current environment or whether an exchange should be considered to obtain more attractive/less expensive coverage. Wilmington Trust uses such an outside, third party to review insurance when we act as trustee of life insurance trusts. 

Please feel free to email me for further guidance, tips and best practices for life insurance reviews.

ANSWER: The complication that arises when splitting assets based upon different risk levels is that it often results in an uneven split of tax consequences.  Generally, lower risk assets often have a higher relative tax basis and higher risk assets often have lower relative tax basis.  If the assets are split based upon risk tolerance, one ex-spouse may find they are at a disadvantage when they ultimately plan to sell assets and the tax bill comes due.  At the same time, if both individuals receive assets that are out of line with their risk tolerance, there are real costs of capital gains taxes and trading costs to realign the portfolios consistent with their risk tolerance.  Each situation is unique requiring a thorough review of the assets down to individual tax lots in order to see what can be accomplished to distribute assets in a proportion consistent with risk levels while maintaining a fair split of the tax basis.

ANSWER: Due to a recent change in the law, certain trusts that are often among the staples of estate planning for married couples can now have unintended tax consequences: If one spouse created a trust during the marriage and the other spouse could get distributions, the spouse who created the trust may continue to be liable to pay the taxes on distributions made after a divorce to their ex-spouse… forever! However, if you create a trust incident to divorce (i.e. within one year of divorce or within six years pursuant to a written marital settlement agreement or divorce decree), but after divorce so the parties are no longer married, there shouldn’t be any income or gift tax implications. The ex-spouse income beneficiary would be taxed on distributions as per the normal rules (avoids the problem that the grantor/creator spouse would continue to be taxed on distributions to an ex-spouse). Since, for divorces beginning in 2019, alimony is no longer tax deductible to the payor or includable in the income of the recipient, that change has eliminated the previous income tax arbitrage of having a higher tax bracket payor push distributions to be taxed in a lower bracket recipient for on-going alimony payments. 

ANSWER: At the outset of building the projection, it is imperative to build a holistic picture of all assets and liabilities including tangible or non-financial assets.  These assets should be considered to ensure overall diversification when combined with the financial assets.  As an example, when an individual owns a number of real estate holdings that encompass a significant portion of their wealth they should not have real estate related securities in their financial assets.  It is important to diversify the types of risks any individual is exposed to across all types of assets. Separately, if these tangible or non-financial assets are held for investment purposes and are available to be liquidated in order to cover future expenses, they should also be incorporated with the financial assets in the sustainability analysis.

ANSWER: You just need a Delaware trustee to create a Delaware Asset Protection Trust (DAPT). Neither the trust creator nor any of the trust beneficiaries need to live in Delaware. Liquid assets would be administered and serviced by a Delaware team, so no hard assets need to be located in Delaware. If you’ve never done a DAPT before, we would be happy to connect you with a Delaware attorney, and we do recommend that a Delaware attorney review drafts of DAPTs. It can be a simple and inexpensive process to get Delaware counsel involved and, as noted, we would be pleased to recommend some attorneys. We would say at least $3 million would make a DAPT worthwhile, but it depends on the level of family wealth. Since DAPTs have an “escape hatch” in that the creator can get access to the assets if needed, people are more comfortable funding with larger amounts than they would be if there was no possibility of future access. That said, the DAPT assets should be considered “rainy day” funds, and not as a go-to source of funds. Most people have peace of mind knowing the assets are accessible in case of emergency.

ANSWER: In these situations, we find it is best to start from the bottom up by using a sample budget in estimating regular expenses.  In walking through each item line by line, the dialogue helps to stimulate areas of expense based upon an anticipated lifestyle.  By asking open questions such as: ”Where do you plan to live?” “How often do you intend to travel?” and “Where would you like to have a membership?” we are able to build a picture of a future lifestyle and help establish an estimate of what that lifestyle will cost.  This process helps to build a foundation of financial concepts along with an awareness on their part of the breakdown in their costs between more necessary and more discretionary items.  With a divorce pending, it is difficult to have an accurate picture of future expenses no matter the financial expertise of the individual.  It is important to establish a range of costs for this lifestyle in order to achieve a sense of confidence that the proposed settlement will be sustainable for the long term.

ANSWER: It’s all about the team!  A trusted team of experts can help best position clients for success. Working with a family law attorney, an estate planning attorney, an accountant and insurance or other experts, a financial advisor will typically be a central member of the team in helping ask the right questions across disciplines to produce financial analytics to leverage at the negotiating table, and beyond. Many key areas need to be integrated including taxes, income expectations, property analysis, lifestyle aspirations, family situation and legacy objectives. A seasoned financial advisor will assist not only in asking the key questions, but will also provide clients with guidance, education and support across these areas, delivered with compassion and sensitivity. Click here to see how our team can help during this transition.

Video Interviews


Attacking and Defending Trust Assets in Divorce


When a marriage ends and a spouse is a trust beneficiary, are the trust assets accessible or off limits in a divorce? Wilmington Trust's Sharon Klein, president, Eastern U.S. Region and Elena Karabatos, partner at Schlissel Ostrow Karabatos, PLLC in New York met with Dan Couvrette, CEO of Family Lawyer Magazine, to examine what types of trusts, trust provisions, trust history and trust administration make trusts more vulnerable to attack in divorce; how to potentially change even irrevocable trusts; and ways to ameliorate surprising tax consequences that might otherwise distort results.
Top Tips in Negotiating Pre-Martial Agreements


Are you most effectively representing your clients in negotiating prenuptial agreements? Wilmington Trust's Sharon Klein, president, Eastern Region and Madeline Marzano-Lesnevich, past president of the American Academy of Matrimonial Lawyers, met with Dan Couvrette, CEO of Family Lawyer Magazine, to outline top tips and traps in negotiating premarital agreements.
Top Tips for Negotiating Settlement Agreements


Are you aware of the analytical data and latest tax law changes that can help you most effectively represent clients at the negotiating table? Wilmington Trust's Sharon Klein, president, Eastern Region and Mark Bank, a founding partner of Bank Rifkin in Michigan met with Dan Couvrette, CEO of Family Lawyer Magazine, to outline important steps family lawyers should take in negotiating settlement agreements.
Top Tips in Leveraging Life Insurance in Pre-Marital Planning and Settlement Agreements


Are you aware of the important steps you can take to ensure obligations are appropriately secured with life insurance pre- and post-divorce? Wilmington Trust's Sharon Klein, president, Eastern Region and Lee Rosenberg, partner at Saltzman Chetkof & Rosenberg LLP in New York, met with Dan Couvrette, CEO of Family Lawyer Magazine, to outline key guidance for leveraging life insurance in the marital planning and divorce contexts.


Our Latest Divorce Insights eBook: Divorce: What Professional Advisors Must Know
Please submit the following information to access this valuable guide, authored by Sharon Klein and designed to help advisors and clients make important decisions before, during, and after a divorce.













Matrimonial and Divorce Advisory Insights


Top 10 Considerations when Faced with Divorce
The dissolution of marriage is one of the most stressful and difficult experiences your clients may face. Our resources can help make the transition as smooth as possible.
Four Divorce Risks Your Clients May Not Know Exist
Divorce can derail family wealth and affect generations far beyond just one couple.
Podcast: Marriage, Divorce, and Asset Protection
Learn about protecting assets before marriage and after a divorce.



Marital Agreement Alert: Change in Taxation of Trust Income Following Divorce Requires Immediate Attention
Trusts created during a marriage can have adverse tax consequences long after divorce.
What Family Law Practitioners Must Know About the New Tax Laws
Seven areas impacted by the current tax laws–including taxation of trust income and other important considerations.
Podcast: What Family Lawyers Must Know About the New Tax Laws for Trust Income Following Divorce
How recent changes in the law have impacted the income tax consequences of trusts after divorce.


Warn Clients About Change in Taxation of Trust Income After Divorce
The tax impact of every trust created during a marriage should be carefully considered in the event of future divorce.
Understanding the Tax Treatment of Alimony
Learn about the current tax law treatment of alimony and other considerations.
Ten Tax Considerations in Divorce
Ten issues clients and their advisors should discuss before a divorce is finalized.


Trust Assets and Divorce: The Latest News
A discussion on the Ferri-Powell case, where a divorcing spouse was able to move tens of millions in trust assets out of reach of his ex-spouse.
The Intersection of Trust & Estates, Matrimonial, and Religious Law
A discussion on the Sharabani v. Sharabani case, which involved the complications in obtaining a Jewish divorce (a “Get”).
Financial Aspects of Prenups
Learn how prenuptial agreements can be an important component of pre-marriage planning.





Top Tips for Negotiating Premarital Agreements
Sharon Klein, Madeline Marzano-Lesnevich, a Family Lawyer in Hackensack, discuss premarital agreements with Dan Couvrette, CEO of Family Lawyer Magazine and Divorce Marketing Group.
What Family Lawyers Should Know About Pre-Marital Estate Planning
Pre-marital estate planning can be key in protecting clients in the event of divorce.
Assets and Prenuptial Agreements
An overview of protecting assets with a prenuptial agreement.





When Family Business Owners Get Divorced
Valuation is key to the equitable distribution of your business.
The Division of Retirement Plan Assets in Divorce
Determining the proper division of retirement assets in a divorce and the actual distribution of these assets is very complex.
Planning for Higher Education in Divorce
Don’t let college planning become an afterthought during the difficult time of divorce.


How to Build Credit After Divorce
Simple steps can help build credit status.
Estate Planning for a Pending Divorce: What Family Lawyers Must Know
Learn which estate planning documents, account titles, and beneficiary designations should be updated as soon as possible.
What Family Law Practitioners Must Know About Life Insurance
In many divorce proceedings, life insurance plays an integral role as part of the ultimate resolution/settlement.


What Family Law Practitioners Must Know About Changing Trust Interests
When irrevocable trusts include ex-spouses or soon to be ex-spouses as beneficiaries, family law practitioners should be aware that trust distributions can potentially be adjusted.
What Family Lawyers Must Know About Modifying “Irrevocable” Trust Provisions
When irrevocable trusts are drafted in happier times, and then times change, is it possible to reduce or even eliminate the interest of an ex-spouse or soon to be ex-spouse?
Podcast: Financial Information Family Lawyers Need to Negotiate the Best Deal for Clients
Discover how financial projection analysis tools can assist your clients with navigating divorce settlements and better position them for their future.



Meet Some of Our Team Members

  • Christy L. Watkins, CFA
    Administrative Vice President and Senior Investment Advisor
  • Anne Kelligrew St.Clair, CIMA
    Administrative Vice President and Senior Relationship Manager
  • Rachael Leberstien, CPA
    Vice President and Senior Wealth Relationship Manager
  • Jenna M. Cohn
    Assistant Vice President and Family Wealth Advisor

Contact Sharon Klein

“Many clients come to us at a pivotal time in their lives. Our approach is to combine empathy with expertise, and we approach every situation with sensitivity and an understanding of what people are going through.”

Please reach out to me personally to learn how we can help you or your clients maneuver through the complexity of divorce, and find financial stability and peace of mind. 

Sharon Klein
President, Family Wealth, Eastern U.S. Region, Head of National Matrimonial/Divorce Advisory Practice, Wilmington Trust, N.A.

212 415 0539

“ Many clients come to us at a pivotal time in their lives. Our approach is to combine empathy with expertise, and we approach every situation with sensitivity and an understanding of what people are going through.”
Please reach out to me personally to learn how we can help you or your clients maneuver through the complexity of divorce, and find financial stability and peace of mind. And please feel free to share this link to our page that discusses Divorce Planning Solutions for Individuals.
Sharon Klein
President, Family Wealth, Eastern U.S. Region, Head of National Matrimonial/Divorce Advisory Practice, Wilmington Trust, N.A.
212.415.0539    Email Sharon


Our Latest Divorce Insights eBook: Divorce: What Professional Advisors Must Know

Please submit the following information to access this valuable guide, authored by Sharon Klein and designed to help advisors and clients make important decisions before, during, and after a divorce.