Divorce is more common now than it was in the past. So is remarriage. However, it is not just your own divorce and subsequent marriage that can affect your
Estate Plan – even a beneficiary’s or a fiduciary’s can significantly impact it, too.
When You Remarry While the thought of having to revisit your Estate Plan after a divorce can be overwhelming, reviewing your plan and beneficiary designations is essential before remarrying. Understanding how remarriage can impact benefits from a former spouse could trigger the need to update your Estate Plan. Often, remarriage will impact your ability to qualify for certain government and pension benefits such as Veteran’s Administration benefits, Social Security benefits, or even survivor’s pension benefits from a deceased spouse’s employer. If you are still assuming that you will inherit or be entitled to some money and property or benefits from a former spouse, it’s important to determine whether those assumptions remain true. If those assumptions are no longer accurate, be sure to take that into consideration when updating your Estate Planning documents. If you and your ex-spouse have previously engaged in Estate Planning, it’s crucial to review and update your Estate Plan after the divorce. While most states’ laws, including Texas, assume that a divorced spouse does not want their former spouse to inherit anything from them, however, this does not hold true for all states. However, if your divorce decree contains a court order to retain an ex-spouse or minor children as named beneficiaries on a life insurance policy insuring your life or if you still want your former spouse to benefit from your estate in any way, an experienced Estate Planning attorney can help ensure that your objectives will be met even if your state has a statute that would prevent it. A divorce also does not affect Healthcare Directives. If you have named your ex-spouse as the person to make medical decisions for you in case of incapacity, you may want to update this document when remarrying, otherwise, your ex will still have the ability to make medical decisions for you.
Estate Planning & Your New Spouse To ensure your assets will be distributed as you wish as well as preserve a good relationship between your children from a former marriage and your new spouse, take time to consider how your new spouse factors into your Estate Plan. Some important questions to ask are:
- What roles will he/she have in your Estate Plan in case you become incapacitated or pass away?
- Do you want your spouse to benefit from your estate in any way?
- How do you ensure your assets are distributed as you intended?
Your planning documents will need to be updated to reflect the designation you would like them to fulfill and which assets he/she will be entitled to. For example, if you want your current spouse to be the beneficiary of a Trust or insurance policies and retirement accounts, you should update those beneficiary designations. On the other hand, if you wish to designate other family members instead of your new spouse as beneficiaries, you need to update your beneficiary designations in your estate documents and financial records accordingly. On the other hand, if you have children from a previous marriage, you may want to keep your property separate from your current spouse so that it will pass directly to your children, grandchildren, or others, including charities. Without the proper legal documents, there’s a very good chance your assets will go to your new spouse and not your children. When that spouse passes away, the assets will go to his/her children, leaving your children bereft of their rightful inheritance. Even if you take a “what’s mine is mine, what’s yours is yours” approach to your respective assets, most states have default laws to ensure that a surviving spouse is not completely disinherited. Without a pre- or postnuptial agreement in place in which both of you agree on how property should be distributed upon the death of one or both of you, your efforts to leave your property to someone other than your new spouse may be seriously frustrated.
When Beneficiaries and Fiduciaries Remarry Remarriage can disrupt your Estate Planning even when you are not the one who remarries. If a beneficiary remarries after you have named them in your legal documents, it may be time to review the provisions of your Estate Planning. 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. This is especially important if the new marriage is rocky because the new spouse is financially unstable, at risk for lawsuits, or so flaky that the marriage appears unlikely to last for very long. An Asset Protection Trust can prevent the inheritance you leave the beneficiary from being attached to their spouse’s creditors or even from being divided as marital property in the event of a divorce. Another instance a remarriage can affect your Estate Plan is with the issue of Guardianship. Let’s say you have named a married couple as guardians for your minor children if something happens to you – a couple you have chosen because they share your values and together would be ideal guardians for your children. However, if this couple divorces, and both remarry second spouses who are nice people with shared values, failing to update your Estate Plan and revising your Guardianship nominations could lead the court to have a very difficult time determining who should be your children’s guardian. It could get even trickier if the children were also the beneficiaries of a significant amount of property from a life insurance policy. Even if each of the former spouses each had the best intentions of protecting the children, if each of them feels that the other is interested in the Guardianship only because of the money associated with your children’s care, the situation could lead to a contentious court battle over your children’s custody. Another one of the risks associated with failing to update an Estate Plan when a beneficiary remarries
can be seen in a recent Texas case. In this case, a mother included a provision in her Trust that provided for her son and her son’s “spouse” to receive a share of the mother’s estate. However, the son divorced and remarried after the mother had executed her Trust. When the mother died and the son discovered that his “spouse” was entitled to a share of the Trust assets, the son argued that his mother had intended his current spouse to receive that share of the Trust. However, the court disagreed and interpreted the Trust so that the son’s former spouse received that share of the Trust. Was this the mother’s intent? Had her intent been clear, there probably would not have been an expensive and contentious court battle. Had the mother recognized before her death that her Trust created some ambiguity on this point, and had she made some important clarifications in her Estate Plan, she could have saved her family a significant amount of grief and expense. We hope the above examples have underscored the point that remarriage is a significant enough life event that you should work with your Estate Planning attorney to carefully update your estate documents to reflect your current situation and intent. Failing to update your Estate Plan and beneficiary designations can lead to contentious court battles over custody and other legal issues. If you or someone named in your Estate Planning documents has remarried, take the necessary steps to ensure your Estate Planning continues to be appropriate for your current situation. The Law Office of Antoinette Bone, PLLC can guide you through the various considerations of your circumstances and implement smart Estate Planning strategies to help you achieve your goals. Call our office today at
(682) 428-3046 to schedule your appointment. Our experienced attorneys will be glad to help ensure that your Estate Plan will work for you and your family exactly as you intend.
To comply with the U.S. Treasury regulations, we must inform you that (i) any U.S. federal tax advice contained in this newsletter was not intended or written to be used, and cannot be used, by any person for the purpose of avoiding U.S. federal tax penalties that may be imposed on such person and (ii) each taxpayer should seek advice from their tax advisor based on the taxpayer’s particular circumstances. Nothing in this message is intended to provide legal advice. This message is for educational purposes only. Ochse v. Ochse, No. 04-20-00035-CV (Tex. App. Nov. 18, 2020).
