No one wants to consider the possibility that a marriage will end in divorce when they are looking forward to getting married. Unfortunately, however, the reality is that about half of all first marriages end in divorce. If your marriage does end in a divorce, and there are children and/or significant assets involved, the divorce will have a significant impact on your assets. With all of that in mind, the Essex Junction estate planning attorneys at Unsworth LaPlante, PLLC discuss divorce and your estate plan.
Planning for the Possibility of Divorce
A prenuptial agreement can be an important estate planning tool because the North Carolina intestate succession laws dictate that a spouse is entitled to inherit from your estate. Those laws govern the distribution of an estate in the absence of a valid Last Will and Testament. Even if there is a Will that attempts to disinherit a spouse, the surviving spouse is entitled to an “elective share” of the estate. If you want to make it clear what your spouse will, and will not, inherit from your estate, a prenuptial agreement should be incorporated into your estate plan prior to the marriage. A prenuptial agreement is a contract entered into between two parties in contemplation of marriage and that takes effect when the couple is legally married. A prenuptial agreement can be narrowly tailored or broadly inclusive, depending on your needs and goals.
Divorce and Your Estate Plan
It can be easy to overlook some of the legal and practical consequences of a divorce. Your estate plan, for example, will need to be reviewed during and after your divorce. Aspects of your estate plan that may need to be modified or revised include:
- Basic estate plan documents. Bequests in a Will or provisions in a trust may need to be changed. You may also need to amend your Will to remove your spouse as Executor or amend a trust to appoint a new Trustee. Likewise, if your spouse is your healthcare surrogate or agent under a power of attorney you should review those documents.
- Beneficiary designations. While you were married you probably listed your spouse as the beneficiary of your retirement accounts, life insurance, and financial accounts. These designations may also need to be updated when you decide to divorce. State and/or federal law may prohibit you from changing some of these during the divorce. In addition, the terms of the divorce may further prevent you from changing beneficiaries. Be sure to consult with your divorce and estate planning attorneys before making any changes to beneficiaries.
- Trust assets. An irrevocable trust is often created to protect assets from creditors and other threats. While a properly drafted irrevocable trust does go a long way toward protecting assets, those assets may still be part of a divorce. A spendthrift trust, for example, typically prevents creditors from accessing the trust assets; however, child support and/or spousal maintenance “creditors” are an exception in most states. Assets already distributed from a trust that has been co-mingled during the marriage will also be subject to division during the divorce. Be sure to go over any existing trust with your divorce and estate planning attorney as soon as possible if divorce appears to be inevitable.
Contact an Essex Junction Estate Planning Attorney
For more information, please attend one of our upcoming FREE webinars. If you have questions or concerns about estate planning and divorce, contact an experienced Essex Junction estate planning attorney at Unsworth LaPlante, PLLC by calling 802-879-7133 to schedule your appointment today.