Over half the marriages in the United States result in divorce. For many people, divorce ends up being one of the most difficult experiences in their life. As a result, when attorneys present a person with divorce paperwork, this individual often fails to consider every little detail of how it will impact their life and does not update their estate plan. Unfortunately, failing to update estate planning documents after divorce could lead to many undesirable complications
A Hypothetical Situation
Imagine, a couple who got married in 2005. The wife had one daughter from a previous marriage. Even though the husband never officially adopted the girl, he treated the girl as she were his daughter during the marriage. A joint trust even referred to the girl as the couple’s “only living child” and named the girl as a residuary beneficiary. These terms have substantial meaning under the law and not considering these statements after a divorce can create substantial challenges.
This couple then divorced in 2021, and the husband passed away shortly after. As is frequently the case when a couple of divorces, the couple failed to update their estate planning documents to reflect marital changes. Following the husband’s death, the ex-wife acknowledged that she was not a beneficiary of the joint trust due to the divorce. The former wife then filed a lawsuit claiming that the divorce did not revoke the ex-husband’s bequest to her. The stepchildren do not view divorcing spouses as an end to their relationship with that stepparent.
Understanding the Estate Planning Impact of Divorce Judgments
In many states, a court enters a divorce judgment, which automatically revokes certain bequests and nominations to a surviving spouse. It’s often the case, however, life insurance policies and irrevocable trust beneficiary designations are not revoked.
If you’re navigating a divorce, updating the terms of your estate plan is often the last thing on your mind. Non-probate transfers to previous spouses are often automatically terminated by statute in some situations, but it’s important to remember that these designations can still be challenged by former spouses and stepchildren.
Non-probate transfers to previous spouses through trusts are not automatically revoked when divorce occurs unless the trust explicitly states these details. If your current estate plans make bequests to children or other family members, you should make sure to review these documents and revise them either to either revoke a gift or state your intention to provide for them following a divorce. If you fail to do this, when you pass away your assets might be distributed in a manner you don’t intend.
Every state has constantly changing laws. No matter where you live, it’s a good idea to speak with an estate planning lawyer to guard yourself and how you pass on assets after divorce.