ESTATE PLANNING ARTICLES
- Prenuptial Agreements and Estate Planning
- 5 Things Estate Planning Attorneys Need To Know About Family Law
ESTATE PLANNING ARTICLES
1. Do not significantly alter a client’s estate plan while her divorce action is
pending, unless the parties have entered into a prior written agreement, or the court has issued a ruling, allowing you to do so. At the outset of a divorce proceeding, one party serves the other with a Summons and Petition. The Summons contains Automatic Temporary Restraining Orders (ATRO) which preclude either party from significantly altering beneficiaries of insurance policies or other coverage protecting either party or the minor children and from disposing of any property (separate or community) in any way, with limited exception. A significant possibility exists that, in a heightened emotional state innate to divorce, your client may approach you about revising her estate during the divorce. Doing so could substantially weaken her position in the divorce proceeding.
2. Make all necessary revisions to a client’s estate plan, per the terms of the
divorce Judgment, once the divorce becomes final. Once the court enters the Judgment, review it closely to see how it impacts your client’s estate. Divorce judgments often alter the beneficiaries of insurance policies, trusts, retirement plans, etc. Judgments also divide property, which means that some community property that was previously part of your client’s estate may now be transferred to the other party, and your client may now possess, as her separate property, that which was community.
3. Spousal support terminates upon the death of the paying spouse. If your
client is receiving spousal support, and the paying spouse predeceases her (particularly if by many years), she may come to a time in her life when she does not have as much income as she had during the preceding years. In this case, she may need assets readily accessible (perhaps easy to liquidate) to meet her basic needs, at which point she would need to revise her will to reflect the assets which will actually remain once she dies.
4. Divorce impacts a client’s tax consequences. Following divorce, couples file
their taxes under different status (usually “single” or “married filing separate”). Also, if there are minor children, one spouse will no longer have the dependency exemption, which will decrease net income. Since estate plans are largely vulnerable to tax consequences, estate planners should ensure that they have an adequate understanding of how a divorce affected their clients and should revise their clients’ estate plans accordingly.
5. If the primary physical custodial parent dies, the other parent will generally
become the primary physical custodian. Absent extenuating circumstances (abuse, neglect, etc.), the primary physical custodian of the children can not state in her will that a third party should raise the children and become their legal guardian. Notwithstanding this, some clients will deliver fairly compelling stories about the other parent abusing or neglecting the children, much of which may not be true. Before including a custody / legal guardian provision in a divorced client’s will, carefully review the custody terms of the Judgment. This may become even more complicated if a Judgment contemplates the non-custodial parent having increased visitation upon proof of completing a drug/alcohol rehabilitation program, anger management classes, etc. and the custodial parent dies before the non-custodial parent has complied. In this case, you should consult with a family law attorney to educate yourself as to the more nuanced areas of child custody law.