Varian Law LLC

Estate Planning During A Marital Separation Can Be Challenging

Spouses retains full rights to the marital estate unless there is a divorce.

There were two deaths in the celebrity world recently that involved marital separations, highlighting a peculiar issue in estate law, according to Forbes in "Kate Spade, Anthony Bourdain And Estate Planning When You Are Separated."

The deaths were of fashion designer Kate Spade and celebrity chef Anthony Bourdain, who both committed suicide while being separated from their spouses.  If Spade and Bourdain had gotten divorces, then their spouses would not be entitled to any portion of their estates.  If the spouses were included in the estate plan, then, after a divorce, they would ordinarily be “written out” by most States’ laws.  However, that does not happen when a couple is merely separated.

The spouse of a deceased person generally retains full rights to the marital estate. That means if there is no estate plan, the spouse will ordinarily receive the entire estate through the laws of intestate succession. If there is an estate plan, then the spouse receives anything the plan says he or she gets.  Moreover, if the spouse does not receive enough of the total assets of the marital estate, then the spouse can usually elect to take his/her spousal elective share (the amount varies between States).

A person separated from their spouse or contemplating a divorce should make his/her first call to a matrimonial attorney and his/her second call to an estate planning attorney.  Any actions that a spouse desires to take with respect to changing their estate plan should be accomplished upon separation and before the filing of a divorce complaint. 

An experienced estate planning attorney will be able to assist you with addressing the many complex estate planning issues that surround a marital separation or divorce.

Reference: Forbes (June 12, 2018) "Kate Spade, Anthony Bourdain And Estate Planning When You Are Separated."

Estate Plans Need Reviews

An estate plan needs constant review that reflects changing circumstances.

Most people's lives are not constant and are often affected by divorce, remarriage, additional children or additional assets, as well as many other changed circumstances as their lives unfold.

When life changes, estate plans normally need to be changed as well, according to Forbes in "Why Continuous Estate Planning Is Essential."

The more wealth that you have, the more often you will probably need to change your estate plan.

This is because your assets will grow, how you hold those assets will change, and tax laws will also change.

Nevertheless, it is not just the wealthy who need to constantly review and update their estate plans.  Everyone should do so, whenever there is a significant change in their lives that should be reflected in an estate plan.

Examples of these changes include divorce, changes to the size or composition of your estate, a new child, a new higher paying job, a new grandchild and much more.

If you have not changed your estate plan recently, then you should have it reviewed by an estate planning attorney.

An experienced estate planning attorney can adjust your estate plan to fit the circumstances that develop in your life.

Reference: Forbes (Sep. 6, 2017) "Why Continuous Estate Planning Is Essential For the Rich and Super-Rich."

Estate Plan Needs a Careful Look if Couple Separates

A comprehensive estate plan should reflect marriage, separation or divorce.

Things can get difficult with estate planning, especially if it includes a trust, if you and your spouse have separated but have not yet obtained a divorce, according to the Canadian newspaper The Globe and Mail in "A warning for couples who have split but not divorced."

Canada and the U.S. have similar laws in the area of marriage, separation and divorce.

The law will not assume that you do not want a spouse from whom you have separated to not inherit under your estate plan.

Why? Until a divorce is finalized, you and your spouse can always get back together and courts cannot divine what you intended.

The solution to this problem is to see an estate planning attorney when you separate from your spouse.

An experienced estate planning attorney can advise you on creating an estate plan that meets your unique circumstances and provide advice on keeping it up to date should a separation or divorce occur.

Reference: The Globe and Mail (Sep. 12, 2017) "A warning for couples who have split but not divorced."

Your Children’s Marriages Can Complicate Your Estate Plan

It is possible you may not be confident in the intentions of your in-laws.

Tensions often arise with in-laws years after a marriage.  Someone in the U.K. recently expressed concern on how to protect a child’s inheritance from a bad son-in-law, according to the This Is Money advice column "I have a terminal illness and our son-in law is unreliable with money - how can we protect daughter's inheritance?"

The answer in the U.S. is the same as it is in the U.K.  

Parents are often wary that their son-in-law or daughter-in-law will meddle in their children's inheritance, spend the inheritance foolishly or, worse yet, walk-away with half of the inheritance after a divorce.

Instead of leaving a child an inheritance outright through a Will a trust can be used to protect the assets from a wayward in-law.  With a trust, you can make sure that your money is only distributed how and to whom you want.  If your child gets divorced, a trust can protect the inheritance.

An experienced estate planning attorney can advise you on creating an estate plan that fits your unique circumstances, which may include considerations for a son-in-law or daughter-in-law.

Reference: This Is Money (Sep. 8, 2017) "I have a terminal illness and our son-in law is unreliable with money - how can we protect daughter's inheritance?"

Divorces by Senior Citizens Can Bring Complications

“Gray divorces” can present some challenging legal situations.

Divorces by senior citizens can create challenges of dividing up a lifetime of accumulated marital property as well as the need for a new estate plan, according to the Indiana Lawyer in "Rise in divorces among older couples presents unique family law issues."

The big issue in estate planning is that plans are often already in place for the couple's estates.

These plans are normally drafted in unison with the understanding that when the first spouse passes away, the surviving spouse will receive the bulk of the estate. When the second spouse passes away, then the estate will go to the agreed upon heirs.

These plans need to be undone when the couple divorces.  This can be difficult to do, unless estate planning attorneys are hired who have the experience to resolve the issues presented by the unexpected change of circumstances.

An estate planning attorney can guide you in creating an estate plan that fits your unique circumstances, which may include a pending divorce.

Reference: Indiana Lawyer (July 26, 2017) "Rise in divorces among older couples presents unique family law issues."

Getting Divorced? Get An Estate Planning Attorney

You don’t just need a divorce/family law attorney if you decide to get divorced.

Many people report that Valentine's Day is when they decided that they needed to get a divorce. If you are one of those people who decided to get a divorce after Valentine's Day, then there is a lot that you need to do, starting with contacting a family law attorney. However, that should not be the only attorney that you call when getting divorced.

Marriage may be about love, but divorce is about money and taxes.  A person contemplating divorce should make his/her first call to a divorce/family law attorney and his/her second call to an estate planning attorney.  In most divorce situations, the assistance of an experienced team, including a divorce/family law attorney and an estate planning attorney, are absolutely essential to the successful completion of the divorce process. 

Most people create their estate plans with the assumption that they are going to stay married to their current spouses forever.  Spouses are often given authority in powers of attorney documents and named as beneficiaries of life insurance policies and retirement accounts.  When you get divorced, all of your estate planning needs to be changed as quickly as possible because you do not know when something might happen to you.  For example, if you are in a car accident a couple of months after your divorce, you might not want your ex-spouse making your medical decisions, especially if the divorce was bitter.

A divorce/family law attorney can guide you in going your separate ways, but an estate planning attorney can advise you on creating an estate plan that fits your new situation.

Reference: Nasdaq (Feb. 10, 2017) "What to Do If You're Divorcing Your Valentine."