Prenuptial Agreements and Premarital Trusts for Seniors, Second Marriages, and Blended Families

Prenuptial agreements ("Prenup") are often portrayed as tools reserved for the ultra-wealthy or for young couples with complex business interests. That view is outdated. Seniors entering a second or third marriage or blended families with children from prior relationships, should consider a well-drafted prenup is one of the most practical ways to protect existing assets, honor prior family commitments, and reduce the risk of later conflict.

Prenups Matter in Later-Life and Blended-Family MarriagesWhen people remarry later in life, they typically bring more than affection into the new relationship. They often bring:

• Homes, retirement accounts, and investment portfolios accumulated over decades;
• Children or grandchildren from earlier marriages;
• Existing estate plans designed to benefit those children; 
• Possible disparities in wealth, income, or debt; and
• Disparities in physical and cognitive health and life expectancy. 

Without clear agreements, state marital-property rules can recharacterize separate property as marital property, create elective-share or community-property claims at death, or force unintended divisions upon divorce. A prenuptial agreement allows the couple to define in advance what remains separate, what becomes shared, how appreciation will be treated, and what rights each spouse will have (or waive) at death. This clarity protects the inheritance expectations of children from prior relationships and reduces the likelihood of disputes between a surviving spouse and stepchildren.  For seniors, the stakes are often higher because there is less time to rebuild assets after an unexpected division, and because retirement income streams and long-term-care resources may be at risk.

The Critical Role of a Pre-marital Trust

A prenuptial agreement is valuable, but it is not invulnerable. Prenups can be challenged on grounds of inadequate disclosure, duress, lack of independent counsel, unconscionability, or failure to meet state formalities. Courts sometimes set them aside, partially or entirely. When that happens, the protections the parties thought they had can disappear.  Of course, employing a prenup also requires consent, and agreement of both parties: either a party may refuse or withhold consent even after initial verbal agreement.  

This uncertainty is why a trust established before the marriage remains an important complementary tool, and why it should not be abandoned simply because a prenup is signed.  Property that is validly transferred into a properly structured premarital trust is generally treated as trust property rather than the individual property of either spouse. As a result:

• The assets inside the trust often do not depend on the prenup for protection against division upon divorce.
• The trust’s terms, rather than state marital-property rules, govern disposition.
• Even if a court later invalidates or limits the prenuptial agreement, the premarital trust can continue to shield the assets that were placed in it before the marriage.

In short, the trust provides a layer of protection that does not rest solely on the enforceability of the prenup. The prenup can reinforce the trust by acknowledging the separate character of the trust assets, confirming that neither spouse has a claim against them, and coordinating elective-share or other spousal rights. The trust itself supplies independent substance.

The premarital trust cannot, however, accomplish all objectives that can be obtained by a prenup. In other words, they do not each accomplish precisely the same objectives. Just like a prenup cannot, itself, avoid probate or accomplish other broader estate planning objectives, a premarital trust cannot define spousal support rights, waive elective share or community property claims, allocate responsibility for debts incurred during the marriage, or create binding agreements about the treatment of income and appreciation earned after the wedding. Those matters generally require the contractual framework of a prenuptial agreement. The two tools are complementary: the premarital trust provides strong, independent protection for assets placed in it before the marriage, while the prenup addresses the broader set of marital rights and obligations that a trust alone cannot control.

Practical Coordination

The strongest approach for most seniors and blended families is to use both tools together:

• Establish (or maintain) a premarital trust that holds significant separate assets.

• Execute a carefully negotiated prenuptial agreement that recognizes the trust, waives claims against trust assets, addresses income and appreciation, and coordinates death-time rights.

• Keep beneficiary designations, account titling, and estate-planning documents consistent with both the trust and the prenup.

• Avoid informal transfers or retitling that could inadvertently convert trust or separate property into marital property.

Abandoning a well-designed premarital trust after signing a prenup is usually a mistake. The prenup can be contested; the trust, if properly funded and administered before the marriage, is harder to unwind.

Process is ParamountEnforceability still matters. Full financial disclosure, independent counsel for each party, adequate time for review, and clear, voluntary execution remain essential. A prenup signed under pressure or without transparency is more vulnerable to challenge, precisely the risk that makes the independent protection of a premarital trust so valuable. For seniors entering a second or third marriage, and for anyone with children from prior relationships, the combination of a premarital trust and a thoughtfully drafted prenuptial agreement offers clearer boundaries, stronger protection for intended heirs, and a better chance of preserving both family harmony and financial security. The prenup sets expectations; the premarital trust helps ensure those expectations can still be carried out even if the agreement is later questioned.

When Courts Look Beyond the Paper: A Note Becomes a Gift

In our recent discussion of Estate of Fields, we examined how the Fifth Circuit Court of Appeals disregarded the formal structure of a late-life family limited partnership and pulled the underlying assets back into the decedent’s gross estate. The court looked past the documents to the timing, the retained benefits, and the absence of a genuine nontax purpose. 

A similar lesson emerges from the Tax Court’s decision in Estate of Spenlinhauer v. Commissioner (T.C. Memo. 2025-134, filed December 30, 2025). Together, the two cases reinforce a consistent theme: when intra-family transfers are made late in life, and the transferor continues to enjoy the property, courts will examine substance over form, and the formal paperwork often fails.

The Spenlinhauer Facts- A Very Generous Grandmother

At age 89, Georgia Spenlinhauer transferred her Massachusetts home to her son in exchange for a 30-year promissory note. She continued to live in the house until her death at age 95. No payments were ever made on the note. Near the end of her life the note was amended to raise the interest rate, restart a new 30-year amortization schedule, and add a self-canceling feature that would forgive any remaining balance at her death.

The estate treated the transaction as a sale and excluded the house from the gross estate. The Tax Court disagreed. It held that the full value of the residence was includible under IRC § 2036(a)(1) because Georgia had retained the right to possess and enjoy the property until her death. The note did not qualify as a bona fide sale for adequate and full consideration.

Why the Formal Structure Collapsed

The court applied heightened scrutiny to the intra-family arrangement and found multiple independent failures:

• No payments were made or documented, undermining any claim that a genuine debt existed;
• The self-canceling feature between family members carried a presumption of gift rather than debt;
• The repayment terms were commercially unrealistic, essentially requiring the mother to live well beyond any reasonable life expectancy; and
• Georgia’s uninterrupted occupancy supported an implied agreement that she would continue to enjoy the property.

In short, the transaction lacked economic substance. The note was treated as illusory, and the house remained in the estate.

The Parallel with Fields

Both Fields and Spenlinhauer illustrate the same judicial approach. In Fields, a rapidly formed limited partnership funded in the final weeks of life failed the bona fide-sale test. In Spenlinhauer, a promissory-note sale of a residence coupled with continued occupancy met the same fate. In each case, the court refused to respect the formal labels, partnership interest or installment note, when the practical reality showed retained enjoyment and an absence of arm’s-length dealing.These decisions also echo a broader caution we have raised about late-life planning generally. Transactions undertaken when health is declining, or death is foreseeable, invite closer examination. What might have been sustainable if implemented years earlier with consistent payments, realistic terms, and clear changes in control becomes vulnerable when executed late and administered loosely.Implications for Families and Advisors

Intra-family residential transfers structured as sales for a note, especially self-canceling notes, remain high-risk techniques when the parent continues to live in the home. The IRS and the courts routinely test whether the arrangement is a true sale or merely a disguised gift with retained use. Failure means estate inclusion, potential gift-tax issues, and the costs of controversy, precisely the sort of expensive, family-straining outcome that careful planning seeks to avoid.

More reliable alternatives exist for clients who wish to transfer a residence while retaining the right to live there for a period of years. A properly structured Qualified Personal Residence Trust (QPRT), for example, is a statutory mechanism designed for this purpose. It carries its own technical requirements and risks, but it does not depend on the fiction of a commercial note that no one intends to pay.

The deeper lesson remains consistent with the planning principles we regularly emphasize: substance matters. Courts look beyond the paper. Transfers that leave the transferor in essentially the same practical position as before, continuing to live in the house, receiving no payments, amending terms late in life, will struggle to withstand scrutiny.

For families, the safest course is still early, well-documented planning that produces real changes in ownership and control, accompanied by contemporaneous evidence of legitimate purpose. When those elements are missing, even carefully drafted notes and partnership agreements can be set aside, leaving the estate and the beneficiaries with unexpected tax bills and unanticipated legal expenses, as well as the residue of conflict. Spenlinhauer is a useful companion to Fields in making that point clear.

Thanks to Wealth Strategies Journal for the report and article idea.

   

Ninth Circuit Decision Allows FTC to Directly Levy Trust Assets — A Caution for Asset Protection Planning

On August 4, 2026, the U.S. Court of Appeals for the Ninth Circuit issued a decision that should give pause to anyone relying on  Domestic Asset Protection Trust (DAPT) for asset protection, particularly against federal agency claims. In FTC v. Hoskins, the court held that the Federal Trade Commission (FTC) could execute directly against a Las Vegas residence held in trust to satisfy a $130 million telemarketing-fraud judgment, without first bringing a separate state-law alter-ego action. The ruling represents a significant limitation on traditional asset-protection strategies when the creditor is a federal agency.

The Case

The FTC had obtained a substantial judgment against the debtors. The debtors held a residence in a trust. A Nevada district court blocked the FTC’s collection efforts, citing Nevada’s six-year statute of limitations on judgment enforcement and requiring a separate state-law proceeding to establish that the trust was the debtors’ alter ego.  The FTC appealed.  The Ninth Circuit reversed. 

Key holdings included:

• The Federal Debt Collection Procedures Act (FDCPA) preempts Nevada’s statute of limitations;
• Under the FDCPA, the FTC may levy any property “however held” in which the judgment debtors have a substantial nonexempt interest; and
• Because the debtors were trustees and beneficiaries of the trust, they retained a substantial interest in the residence. No separate alter-ego lawsuit under state law was required.

In short, federal collection procedures overrode state-law protections that asset-protection planners often rely upon.

 Asset Protection Planning Threatened? 

Asset protection planning frequently uses trusts (including irrevocable or discretionary trusts) to create legal separation between an individual and certain assets. State law often protects these trust (or another way to look at it is that these trusts exploit existing state laws) by requiring a creditor to bring an alter-ego, reverse-veil-piercing, or similar action before reaching trust assets. Statutes of limitations can also limit how long a judgment remains enforceable.

FTC v. Hoskins strips away both layers of defense when the creditor is a federal agency enforcing a judgment under the FDCPA. The court treated the debtors’ status as trustees and beneficiaries as sufficient to establish a “substantial nonexempt interest,” allowing direct levy.

This is not a wholesale invalidation of trusts. It is, however, a clear signal that trusts do not provide the same degree of insulation against federal agency collection that they may offer against ordinary private creditors.

Although the decision in the case involved a domestic trust, the reasoning and holding of the case would also apply to offshore trusts.  Its statutory foundation (FDCPA “property however held” and a substantial nonexempt interest) can be applied to interests in overseas trusts. The decision involved a domestic trust holding U.S. real property, however, and the practical obstacles to reaching assets held by an independent trustee in a strong asset-protection jurisdiction remain substantially higher.

For clients concerned about federal agency exposure (FTC, SEC, DOJ, healthcare enforcement, etc.), this reinforces two points:

• Retained interests or control in any trust (domestic or foreign) create vulnerability' and  

• True offshore protection depends far more on the location of the assets and the independence of the foreign trustee than on the formal label of the trust.

As always, outcomes turn on the specific facts, the degree of retained control, the location of the assets, and the willingness of a court to use contempt powers.

This Matters More in Certain Fields

The decision is limited to federal agency collections, but those are precisely the areas where robust asset protection is often most needed. Federal agencies with significant enforcement and collection authority include:

• The Federal Trade Commission (consumer protection and fraud matters);
• The Securities and Exchange Commission (securities and investment-related claims);
• The Department of Justice (various civil and criminal-related recoveries);
• Agencies involved in healthcare enforcement (e.g., matters arising under federal healthcare programs);
• Labor and employment-related federal enforcement; and
• Other financial regulatory bodies.

Professionals and business owners in finance, healthcare services, telemarketing or consumer-facing industries, and other heavily regulated or labor-intensive fields face elevated exposure to federal investigations, civil penalties, and large judgments. In these sectors, the ability of a federal agency to reach trust assets more directly reduces the effectiveness of conventional trust-based planning.

Practical Planning Guide

For clients concerned about potential federal exposure, several points follow:  

• Do Not Assume State-law Barriers Will Hold: Statutes of limitations and alter-ego requirements under state law may be preempted or bypassed when a federal agency collects under the FDCPA.

• Interest in the Trust Matters. Retaining powers as trustee or beneficiary can create the “substantial nonexempt interest” that allows federal levy. More complete separation may be necessary, though complete separation often conflicts with other planning goals (control, tax treatment, or flexibility).  Avoid "comfort clauses."

• Layered Planning Is Paramount:  Trusts are rarely a complete solution on their own. Liability insurance, entity structuring, compliance programs, and careful management of personal guarantees or retained interests continue to play essential roles.

• Jurisdiction and timing matter. This is a Ninth Circuit decision. Other circuits may reach different conclusions, but federal agencies will likely cite it in future collection efforts.

• Early planning is preferable. Once a federal investigation or enforcement action is underway, options narrow significantly. Proactive structuring, while still subject to fraudulent-transfer and other limits, is generally more effective than reactive moves.

 Conclusion

FTC v. Hoskins does not mean asset protection trusts trusts are useless. It does mean that asset-protection strategies built primarily on state-law formalities face a meaningful vulnerability when the creditor is a federal agency armed with the FDCPA. For clients in higher-risk industries, such as  finance, healthcare, consumer services, and similar fields, this decision reinforces the need for realistic expectations and multi-layered planning rather than reliance on any single technique.

As always, the appropriate structure depends on the individual’s circumstances, risk profile, and overall estate and business planning goals. Clients with potential federal exposure should review existing arrangements with counsel familiar with both asset-protection principles and federal collection procedures.

Source: Ninth Circuit decision in FTC v. Hoskins (Aug. 4, 2026), as reported in the Wealth Strategies Journal Daily Update of August 11, 2026.

Michigan’s New Guardianship Protections: Comparison with Ohio and Missouri

In July 2026, Michigan Governor Gretchen Whitmer signed two bipartisan bills, Senate Bill 585 and Senate Bill 586, aimed at strengthening protections for adults under guardianship. These measures, welcomed by advocates including the National Association to Stop Guardian Abuse (NASGA), address two common points of ward vulnerability in guardianship cases: the sale of a protected person’s real estate and changes to their residence.

What the New Michigan Protections Require

The new law requires a professional appraisal (conducted within the prior six months by a licensed appraiser) before a court may approve the sale of real estate belonging to a person under guardianship or conservatorship. If the court approves a sale below the appraised value, it must justify on the record why the sale is in the person’s best interest.

The law also requires a guardian to obtain court approval before changing the residence of a person under guardianship in most cases. The guardian must demonstrate that the move is in the person’s best interest, explain why it is the least restrictive appropriate setting, describe efforts made to keep the person in their home, and address the impact on relationships and activities. The court must make specific findings.

These are targeted, practical reforms focused on two high-risk decision points where abuse or overreach can quickly strip a person of their home and remaining independence.

Are These Protections Unique? Comparison with Ohio and Missouri

The Michigan protections are not entirely unique, but they tighten and clarify safeguards that vary in strength and specificity across states.

Ohio, for example, already requires court involvement for the sale of a ward’s real estate in most situations. Guardians generally must either obtain consents from the spouse and next of kin and meet an 80%-of-appraised-value threshold (for certain consent sales), or file a formal land-sale action in probate court. 

Appraisals are commonly required or expected. Ohio law also emphasizes consideration of less-restrictive alternatives before guardianship is imposed. However, Ohio does not appear to have as explicit a statutory mandate as Michigan’s new rule requiring a recent professional appraisal and on-the-record justification for any below-appraisal sale in the specific context of a protected person’s home. 

Residence changes are subject to the guardian’s duties and court oversight, but Michigan’s new bill imposes more detailed pre-move petition and best-interest findings requirements.  The weakness in Ohio law is in applying the "least restrictive means" test at the appointment of a guardian, and not requiring it specifically for changes of residency.  In order to protect a ward, a family member or agent would have to contest the change of residency, and a court may simply approve these on recommendation of a guardian in the best interest of the ward.  In short, there is no requirement that a guardian or court assure that a change of residence to an institution is the least restrictive alternate possible. 

Missouri law requires similarly court approval for the sale of real property belonging to a protectee in supervised matters and generally expects the sale price to meet a threshold related to appraised value (commonly referenced as not less than three-fourths in many supervised contexts). Guardians and conservators must act in the protectee’s best interest, and the 2018 reforms (SB 806) strengthened the least-restrictive-alternative principle and reporting requirements. Missouri does not appear to have a recently enacted, narrowly tailored statutory requirement comparable to Michigan’s mandatory recent professional appraisal plus explicit on-the-record justification for below-value sales, nor the same detailed pre-move petition process for residence changes that Michigan just adopted.

Michigan’s new laws are incremental, though, rather than rather than revolutionary. They add clearer, more specific procedural guardrails around two decisions that frequently lead to rapid depletion of a person’s assets and loss of their home. Ohio and Missouri already require court oversight of real-estate sales and impose best-interest standards, but Michigan’s 2026 bills make the appraisal requirement and the residence-change findings more explicit and harder to bypass.

Michigan’s new requirements are welcome incremental protections. They do not, however, eliminate the need for proactive planning. The most effective way to avoid the risks associated with guardianship, i.e., the loss of independence, sacrifice of family input and control, loss of the home, rapid asset depletion, and limited recourse, remains the execution of well-designed estate planning documents such as trusts with aging-in-place and guardianship advanced directives, powers of attorney, and supported decision-making arrangements, carefully drafted and deployed before capacity is lost. Once a court has appointed a guardian, even improved statutory safeguards operate after the fact and depend on judicial oversight that varies in rigor. The Michigan legislation underscores a recurring theme: when guardianship becomes the default response, protecting the person’s remaining property and preferred residence requires specific, enforceable procedural hurdles. Families and advisors in Ohio, Missouri, and elsewhere should note both the progress and the continuing gaps.Thanks to the National Association to Stop Guardianship Abuse (NASGA) for highlighting the signing of the Michigan law. 

Protecting Seniors from AI-Generated Fraud: Insights from Recent Senate Testimony

On July 29, 2026, the Senate Special Committee on Aging held a hearing titled “The AI Deception Machine: Deepfakes, Chatbots, and the New Frontier of Senior Fraud.” Paul Benda, Executive Vice President for Risk, Fraud and Cybersecurity at the American Bankers Association, testified about the rapidly evolving threat that generative artificial intelligence poses to older Americans.  

Benda’s central point was straightforward: generative AI is not inventing entirely new forms of fraud so much as making the old ones far more effective, scalable, and difficult to detect. Criminals can now produce convincing voice clones, deepfake videos, realistic photographs, tailored text messages, and fabricated online personas with relatively little technical skill and at low cost. What once required specialized talent or significant resources can now be accomplished quickly and repeatedly. The result is a form of industrialized deception that exploits the trust seniors place in familiar voices, faces, and institutions.

The hearing underscored that these tools are particularly dangerous for older adults. Many seniors remain active users of telephone, email, and messaging platforms. When a call appears to come from a grandchild in distress, a bank security department, or a government agency, and the voice or video looks and sounds authentic, the usual warning signs become harder to recognize. The technology lowers the barrier for criminals while raising the cognitive and emotional burden on the potential victim.

Benda emphasized that banks already use AI defensively, to spot unusual patterns, flag suspicious transactions, and protect accounts. The problem, he argued, is that the same technology is being weaponized on the other side of the transaction, often through channels outside the banking system itself, such as telecommunications networks and social platforms. A coordinated response is therefore necessary.

The ABA’s recommendations focused on several practical steps:

• Establishing a National Office for Scam and Fraud Prevention to provide accountable federal leadership and coordination across agencies;
• Strengthening telecommunications safeguards so that voice and messaging systems are harder for criminals to exploit;
• Improving information sharing among financial institutions, telecommunications providers, technology companies, and law enforcement;
• Supporting legislation such as the SCAM Act and modernizing identity and authentication systems; and
• Ensuring that every sector involved in the lifecycle of a scam—communications, identity verification, payment systems—bears appropriate responsibility for reducing risk.

Importantly, the testimony avoided calls to restrict beneficial uses of AI. The focus remained on reducing criminals’ ability to misuse the technology while preserving the defensive tools that institutions need to protect customers.

For those of us who work with older clients on aging-in-place and estate planning matters, the implications are direct. Financial exploitation remains one of the most common and damaging risks seniors face. AI-generated deepfakes and chatbots simply raise the sophistication of the threat. Clients and their families need clear, practical guidance: 

• verify unexpected requests through known, independent channels; 
• be skeptical of urgent demands for secrecy or immediate payment; and
• maintain open communication within the family about possible scams.

The hearing serves as a useful reminder that protecting seniors from financial abuse requires more than individual vigilance. It also depends on stronger systemic safeguards. As generative AI continues to advance, the gap between what criminals can convincingly fabricate and what an ordinary person can reliably detect will only grow. Thoughtful policy, better coordination, and continued education remain essential.

Families and advisors should treat this development as another reason to review practical protections such as trusted contact designations, transaction alerts, limited power-of-attorney scopes, and regular conversations about how to handle unexpected requests for money or information. The technology may be new, but the underlying need for caution and planning is not.

For more information and assistance in safeguarding yourself or a family member, please consider the following: 

• Safeguarding Seniors: Comprehensive Strategies to Prevent Elder Fraud and Financial Abuse;
• Rethinking Elder Abuse Strategies: How Prophylactic Planning Can Safeguard Autonomy and Aging in Place;
• Identity Theft: Credit Monitoring and Freezes (With Links to Credit Agencies);
• Undue Influence, and the Importance of Safeguards in Estate Management; and
• Handy Link - Reporting Ohio Adult Abuse or Exploitation.
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