What is the Effect of Divorce on Wills, Trusts and Estates?
The emotional trauma of divorce often leads spouses to overlook important financial issues as well as the long-term effects divorce can have on wills, trusts and estates. States vary on how they deal with an ex-spouse who attempts to collect on an inaccurate will. Arizona, Texas, California and some other states have laws in place which stop an ex-spouse from collecting on a will that is no longer accurate. Other states will simply cross out the name of the ex-spouse and move on to the next beneficiary in line, when the will goes through probate. When a will is dealt with privately, rather than going through probate, there are no guarantees whether the stated provisions will be honored.
Very few states honor the will in place following a divorce. While challenges can be offered by other family members, regarding the intent of the will, such challenges can result in the will being tied up in probate. This is why it is extremely important that you change your will, trust and other estate documents following a divorce if you don’t want your ex-spouse to inherit following your death. In addition to drafting a new will, your estate planning attorney will probably advise that you include a revocation clause in the will which specifies the previous will is being revoked.
What About a Trust Following a Divorce?
How a trust must be changed after a divorce depends largely on the type of trust and the intent of the trust. If a couple creates an irrevocable living trust, then no changes can be made to the trust, regardless of the divorce. Irrevocable living trusts transfer all assets and control to the trustee immediately, and, in most cases, this type of trust is intended to benefit children. If this was the intent of a couple’s irrevocable trust, then essentially, a divorce changes nothing regarding the trust.
A revocable living trust which allows the couple to control the assets in the trust, must be amended or dissolved, following a divorce. When a trust is dissolved following a divorce, the assets in the trust will be listed on financial disclosures, and will be treated like any marital assets during the division.
Divorce and Other Estate Planning Documents
Other estate planning documents to consider during a divorce include living wills, health care directives, and powers of attorney documents, since, typically, married couples will have named one another in these documents. Particularly after a contentious divorce, few people would want their ex to have control over their financial or medical affairs. Make sure these documents are amended to reflect current wishes. Further, remember that your divorce decree has absolutely no impact on the appointment of your ex’s family or friends as guardian of your children, beneficiaries, or executor.
In other words, suppose you and your spouse have chosen his sister as guardian of your children in the event you died simultaneously. After the divorce, you might or might not want this arrangement to continue, therefore it must be addressed. Or suppose you and your spouse left your beach house to his youngest sister in your joint will. You are awarded the beach house in the divorce, and although your intentions are to leave it to your children, if you were to die without making the proper changes to your will, your spouse’s younger sister would still be in line to inherit the house.
Don’t leave such important issues regarding your estate planning documents to chance. Even though you may feel overwhelmed following your divorce, take the time necessary to discuss crucial changes with your estate planning attorney. Contact us today to get started!