Tag: estate

Divorce Effect Will Wills Estate Planning

What is the effect of a divorce on a will?

The effect of divorce on a Will depends on your state’s law. In some states, a divorce decree automatically revokes your entire Will and in others, it revokes only those provisions that made gifts to the former spouse, not the whole Will. Sometimes the Will might be affected by the divorce agreement or the court decree, even if the Will provisions don’t relate to your former spouse. For example, if you had left your interest in the family home to one child and a stock portfolio to another and the divorce decree awards ownership of the family home to your ex-spouse, your Will would then leave nothing to one child and probably more than you intended to the other.

Parties getting a divorce should review their Wills to make sure the Wills are still in effect after the divorce and that the Wills still express what the parties want and cover changed financial situations. These parties should also review other estate planning devices such as trusts and property owned by joint tenancy with a right of survivorship, insurance policies, joint bank accounts, pay-on-death bank accounts, and so on. Never rely on the divorce agreement or decree to change these. It’s important to change the title to property, named beneficiaries, or account information for each piece of property or account. Contact the banks, insurance companies, pension plans, or property registration offices directly to change beneficiaries and property ownership. Trust provisions also have to be changed if your want to eliminate your ex-spouse as a beneficiary.

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Challenging Postnuptial Asset Protection Estate Planning

My stepmother gave up her right to an outright distribution of my father’s 401k plan through a post nuptial agreement. The agreement as well as my father’s will clearly state that she is to get 10% of the principal value of the plan per year while my brother and I receive the balance. My stepmom is now trying to void the post-nup because my father did not disclose a life insurance policy worth 100k. Does she have a leg to stand on?

Setting aside an agreement for fraud is a long established principle of law. And misleading statements can be fraud in some circumstances. Similarly lack of full disclosure or over-reaching in a pre- or post-marital agreement can be a basis for setting something in it, or the entire agreement itself, aside. The issue is was there a lack of disclosure, was it truly material, and how do you know your stepmother is right and can prove a failure — perhaps an intentional failure — to disclose? Eventually this would be decided by a judge or jury. Among the issues that would be influential was the nature and duration of the marriage, the parties’ relative wealth, the terms of the agreement (was she also comfortable, and did she want to protect her assets for her family if she died first), and how overreaching or generous it was or wasn’t, and if she made full disclosure.

If she is successful what would she get? It may not be as much as she is getting now, or it may be a lot more. The beneficiary of the 401(k), and probably the waiver, is governed by Federal law, but its value may impact her rights under other state laws of intestate succession or election. AND a court may not let her just set that aside and keep the benefit of everything else. For example, if she knew about the $100,000 policy, what more would she have received for her consent, 1/3rd of that — not the entire $401(k). Also, if she is to get 10% of the principal in the 401(k) per year, anyway, unless she is in her 80s or in bad health, the expected value of that income stream may pretty much equal the whole value. Further, if paid from the 401(k) the proceeds are subject to income tax as she withdraws it. So getting the 401(k) may not mean much financially. This cries out for an experienced lawyer. The lawyer may, after considering the law, the facts and the costs, suggest the matter be compromised, with her getting something more, but not nearly everything she wants.

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