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Here’s How Divorce and Remarriage Can Affect Your Estate Plan

It’s no secret that divorce is more common now than it was in the past, as is remarriage.

As if divorce wasn’t complicated enough, depending on how long a prior marriage lasted, the former couple may have engaged in certain levels of estate planning together. When this is the case, it’s important to have clarity about how a subsequent marriage can impact the estate planning from a prior marriage.

If your or someone named in your estate plan has remarried, there are a few things you should be aware of. There’s also a few steps we recommend taking if you want to make sure your estate plan continues to be appropriate for your current situation.

What Happens When Your Existing Estate Plan is Left Unaddressed

First, make sure you understand how your current estate plan will operate at your former spouse’s death. Most states’ laws assume that a divorced spouse doesn’t want their former spouse to inherit anything from them. So even if a will, trust, or life insurance policy names a former spouse as a beneficiary, there’s a high chance the law will prevent the named ex-spouse beneficiary from receiving the distribution from the deceased ex-spouse’s estate.

You have to be careful with this, though, because it doesn’t hold true in every state. So regardless of what your existing estate plan says, you must be diligent in reviewing your estate plan, as well as beneficiary designations for your life insurance policies and retirement accounts, to make sure your ex-spouse is no longer named as a beneficiary (unless the terms of your divorce settlement require it).

You may still want your former spouse to benefit from your estate plan in some way. If this is the case, work with an attorney to make sure your objectives will be met, even if your state has a statute that would prevent it. It’s also not a bad idea to review your divorce decree to check whether it contains a court order to retain an ex-spouse or minor children as named beneficiaries on a life insurance policy insuring your life.

Equally as important is considering whether you want your current spouse to be the beneficiary of your estate planning or insurance policies and retirement accounts. If so, be sure to update those beneficiary designations. Or, if you’d like to designate other family members as your beneficiaries instead of your current spouse, you need to update these designations in your estate planning documents and financial records accordingly.

Lastly, if you remarry, don’t assume that you’ll inherit or be entitled to money, property, or benefits from a former spouse. Often, remarriage impacts your ability to qualify for certain government and pension benefits (e.g. Veteran’s Administration benefits, Social Security benefits, survivor’s pension benefits from a deceased spouse’s employer). If this is the case for you, be sure to take that into consideration when updating your estate planning documents.

Consider How Your Current Spouse Factors Into Your Estate Plan

In this first scenario, let’s assume you and your current spouse have decided to take a “what’s mine is mine, and what’s yours is yours” approach to money and property. If that’s the case, make sure you understand how your state’s laws handle property division at the death of a spouse. Even if your estate plans has provisions to keep your property separate from your spouse so that it will pass directly to your children, grandchildren, or others, most states have default laws to ensure that a surviving spouse isn’t completely disinherited. These laws (commonly referred to as intestacy, elective share statutes, or community property rights can significantly disrupt even the most carefully drafted wills and trusts. Without a pre- or postnuptial agreement in place in which both of you agree how property should be distributed upon one of your deaths, your efforts to leave your property to someone other than your current spouse may be seriously impacted.

On the other hand, let’s assume that you do, in fact, want to make sure your surviving spouse receives some (or all) of your property. In this case, it would be important that your estate planning documents clearly communicate your intent. Doing so will help preserve a good relationship between your children, your former marriage, and your current spouse. When children understand what your intentions are and why you’re dividing property a certain way, their assumptions can be corrected about why (for example) you’d leave the family home to their stepparent.

When Your Beneficiaries and Fiduciaries Remarry

It’s not only your remarriage that can affect your estate planning, but your beneficiaries and fiduciaries, too. For example, you may want to review the provisions of your estate planning if a beneficiary’s new marriage is rocky (the new spouse is financially unstable, at risk for lawsuits, an untrustworthy person, etc.). In this case, you may want to specify that any inheritance that passes to your beneficiary alone must be held in an ongoing asset protection trust for their benefit. Doing so can prevent the inheritance you leave them from being attacked by their spouse’s creditors or even from being divided as marital property in the event of a divorce.

Similarly, issues can arise if something happens to you and you’ve named a married couple as guardians for your minor children. For this example, let’s say you named your sister and her husband as guardians for your minor children if you die unexpectedly. You chose them because they share your values and, together, would be ideal guardians for your children. Let’s imagine that they get divorced and both remarry second spouses who are equally nice with shared values. If you fail to update your estate plan and revise your guardianship nominations, the court may have a hard time deciding who should be your children’s guardian. You can see how this situation may lead to a contentious court battle over their custody. This is particularly true if the children were also the beneficiaries of a significant amount of property from a life insurance policy, and your sister and her ex-husband feel that the other is only interested in the guardianship because of the money associated with taking care of your children.

We Can Help

Clarity about your intentions when it comes to your money and property is extremely important. It will save your family a significant amount of grief and expense.

Divorce and remarriage are significant life events that will require working with your estate planning attorney to update your documents. If you’re lost about what you need to do next, reach out to us. We have the expertise and experience to ensure your estate plan will work for you and your family exactly how you intend.

Call Santaella Legal Group, serving San Ramon, Danville, Dublin, Pleasanton & the Tri-Valley area, at (925) 831-4840.

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