It’s not just about the divorce.
The public is surprised and fascinated by the recent separation and pending divorce of movie stars, Brad Pitt and Angelina Jolie. We watch with fascination the same as we are drawn to watching a car wreck. In some way we are disappointed that two beautiful and competent people are unable to survive as a married couple. We also have some version of a feeling of familiarity that makes us wonder what will happen with their children.
We watch the news with great interest as more details come out about the adopted children, the biological children, the Prenuptial Agreement, and we watch the custody issues. There is another issue that comes up.
What happens to the Estate Plan?
As we have discussed in previous blogs (Redo your estate plan if you Separate or Divorce) when there is a separation and divorce you need to review your Estate Plan. Most married couple’s Estate Plan leaves their assets to the surviving spouse and then beyond that down to their children or other loved ones. When there is a divorce, the person that most people do not want to leave what they own to is their former spouse. That may be the last person on the planet that they want to leave their assets to.
Couples often enter into a Separation Agreement, while the parties are separated, but not yet divorced. The Separation Agreement normally contains a section that releases the claims of inheritance from their spouse. (Under North Carolina law as soon as you say “I do” you have an inheritance interest in some assets of your new spouse. Unless you have a Prenuptial Agreement releasing those rights). Therefore, after the Separation Agreement is in place you do want to meet with an experienced qualified Estate Planning Attorney to modify your Estate Plan. You want your assets going to your loved ones, not the soon to be ex-spouse.
When you are doing your new Estate Plan, remember to keep in mind your original goals. You will want to make sure that you have what you want going to those you love in a protective manner, and that you have the right people in control to help make that happens. You will want to have the right people in the right roles if you become sick for your health care needs, and people that are trustworthy and competent so that your assets move to your loved ones at the right time and in the right manner per your Estate Plan.
You will want to make sure that you have Mental Disability Planning, so that you are protected in the event that you become mentally disabled. You will want to make sure that if you leave assets to your children, that they do not lose them in the event of a divorce, car wreck lawsuit or squander. You will also want to avoid the expense, delay and publicity of Probate Court.
It’s easy to forget your Estate Plan after going through the trauma of a divorce.
However, it is just as important to take care of yourself and your loved ones as it was prior to the Divorce.
Death Beneficiaries on Life Insurance and Retirement Accounts
Make sure to review who you have named as the Death Beneficiary on your Retirement Accounts and Life Insurance. Many people forget about that after a divorce and end up leaving a valuable assets that they would want going to a loved one to the person that they least want to leave it to, an ex-spouse. Men are notorious for this oversight after a divorce.
Will the Prenuptial Agreement affect the Estate Plan?
Many couples, like Brad Pitt and Angelina Jolie, will sign a Prenuptial Agreement prior to getting married. Most times that Prenuptial Agreement stipulates certain resolutions on the party’s Estate Plan in the event of a divorce. Often it waives or releases any marital interests a spouse may have on the other person’s property that was acquired by law by the act of marriage (see above).
Sometimes the parties will agree how they want to do the Estate Plan stipulating such items as the surviving spouse being named the primary beneficiary on Life Insurance and Retirement Plans, and how assets would move to the parties children. It also might stipulate purchasing life insurance by one of the parties to help take care of the surviving spouse and any surviving minor children.
Most Estate Planning related to in Prenuptial Agreements just states that the parties release any inheritance rights that they would acquire by reason of marriage. It might contain a lot more with parties that have hundreds of millions of dollars in assets, such as Brad Pitt and Angelina Jolie.
At the Law Firm of Steven Andrew Jackson, Attorney and Counsellor at Law, we have helped hundreds of families protect themselves and their loved ones, avoid Estate Taxes and Probate Costs, and keep their Estate Plans current with the law through The Customized Protective Estate Planning Solution™.