When Tammy Wynette first sang about it, divorce was a taboo topic. Today, nearly everyone has a close friend or relative that has ended a marriage. In fact, divorce is so common that many people do not stop and think about what it means for their estate plan.
Divorces (along with births, deaths, and property transactions) necessitate an update to estate planning documents. Very few people want their ex or their adult child’s ex to inherit assets they expected others to receive or make end of life decisions for them.
Will My Ex End Inherit My Estate?
Thankfully, Virginia, like many other states, cuts ex-spouses out of end of life planning documents that were created before a divorce. However, having a will that no longer clearly reflects your wishes is not ideal. For example, if you and your spouse created your estate plan at the same time, as most couples do, there might be people or organizations named in your will that were more your ex-spouse’s choice than yours.
It is also important to take a look at the titles and other ownership documents of assets you own. For example, who is listed as the beneficiary on your retirement accounts? What about on your life insurance policies? For some of these accounts you may be legally obligated to keep your ex as a beneficiary. There are a lot of complicated legal issues involved with dividing up retirement accounts, and people with minor children are often required to take out a life insurance policy on themselves that names their ex as a beneficiary in case they pass away before their children reach adulthood. It is important to make sure that all of these documents are updated post-divorce so that your family and friends are not suck fighting it out in court after your death.
Protecting Your Assets From Other People’s Divorces
Your own marriage is not the only one you need to plan around. What happens if you gift your married, adult child a valuable asset, and they later get divorced? Unless the documents transferring the asset to your child were carefully drafted, and they were careful about how they treated the asset, your child’s ex can likely claim an interest in the asset.
Protecting assets you gift or pass along via your estate plan is more awkward that it is difficult. One of the best ways to protect such assets is to ask your children to mention gifts and inheritances in their pre or post nuptial agreements. A contract addressing a particular gift might also suffice.
If you are passing on a property, like a beach house that has been in your family for years, it is probably better to set up a trust to hold the asset.
Updating Your Estate Plan Is Something Everyone Should Do
If you or someone you have named in your estate plan is going through a divorce, it is important to talk to an experienced estate planning attorney. Your divorce attorney may or may not be able to take care of making any changes you need.