Update your estate plan following divorce

Following any dissolution of marriage, a wise person updates their estate plan.  This step is particularly important if there are children or assets involved.  Approximately one-half of marriages in the United States end in divorce, and for most people involved, it is one of the worst experiences of their lives.  As a result, many participants in divorce lose concentration for a period of time following a final dissolution judgment and forget to update their estate plan.  By doing so, the participant can create an even larger probate issue in the future.

What happens when an estate plan is not updated?  James and Linda were married in 1990.  Linda had one daughter, Sue, from a previous marriage. James had a son and a daughter, from a previous marriage.  Even though James never officially adopted Sue, he treated Sue as if she were his daughter throughout the entire marriage to Linda, and even went so far as to include her as an equal 1/3 beneficiary in his estate planning documents.  Linda stood to inherit many assets by and through her marriage to James so she was not specifically listed as a beneficiary in the estate planning documents.

James and Linda divorced in 2017, and James passed away shortly thereafter. As is often the case when a couple dissolves their marriage, one or both of them failed to update their estate planning documents to reflect their change in marital status. Did James still want Sue to inherit after the divorce? We will never know for sure, but his estate plan now speaks for itself in that its creator has died. As is the case in most divorces, James likely wanted Sue to benefit from his estate only if he remained married to Linda.

Following James’s death, Linda acknowledged she was no longer a beneficiary because of the divorce and that the dissolution judgment divided their marital assets. Nevertheless, Linda refused to waive any bequest to her child Sue. Instead, Sue stood to inherit her share just like all other beneficiaries listed in the estate planning documents.

Tony and Carla were married in 2000.  Each had one child from a previous marriage.  Tony purchased a life insurance policy insuring his life with his spouse as primary beneficiary and his natural child and his stepchild as equal, successor beneficiaries.  Tony worked 50 hours per week and owned his own small business.  Carla was a stay-at-home wife who refused to work.  One night Tony returned from work to find a note on his kitchen counter that read Carla had left the marriage for her yoga instructor and would not return.  She and her child soon moved in with the yoga instructor and lived in a nearby town.  Tony and Carla divorced in 2005 and Tony went into a deep depression for several years.  Ultimately, Tony took his life one evening.

While Tony likely intended to change the beneficiaries on his life insurance policy, his depression and sudden change of circumstances caused him to lose sight of that obligation.  Because Tony never got around to changing the beneficiaries on his life insurance policy, his former spouse inherited all proceeds from the life insurance policy and Tony’s natural child received nothing.

Brian and Samantha were married in 1999.  Neither had been previously married nor did they have children.  Shortly after their marriage, Brian and Samantha established some non-probate transfer designations on bank accounts and vehicles.  Each also listed the other as their primary beneficiary in their respective Wills.

Brian and Samantha divorced in 2010 after Samantha alleged Brian was abusing her.  Prior to the marriage, Samantha filed a petition for adult abuse order which was approved by the court after Samantha continued with her allegations that Brian was abusive and a threat to her life.  Because Brian was in law enforcement, the adult abuse order caused him to lose his employment and ultimately his career ambitions.  Weeks later, the couple was divorced but they avoided the cost of an attorney and did the divorce themselves.  Brian was busy at work and in observance of the adult abuse order refrained from attending any court proceedings.  Each party received the bank account in their own name and any vehicle in their own name.  Brian never got around to changing the payable-on-death beneficiary on his bank account or the transfer-on-death beneficiary on his vehicle title although he did create a new Will.

One year after the divorce, Samantha hooked up with a local landscaper and began a fiery relationship.  Included in that relationship was some unusual sexual activities involving third parties and other couples.  During one steamy encounter with a man not her husband, Samantha confided that she had lied about being abused by Brian so that she could enter into her new open relationship with the landscaper.  The man then sexually involved with Samantha happened to be friends with Brian and played on the same softball team with Brian so he planned to tell Brian the next time he saw him at softball.  Unfortunately, Brian was killed the next day when his vehicle was struck head on by a drunk driver.  Because Brian never changed the beneficiary to his bank account and his vehicle, a prolonged probate case occurred wherein Samantha claimed non-probate ownership of the account and vehicle and eventually prevailed.  Brian’s name was never cleared of the false abuse allegations.

If you are going through a divorce, make sure your dissolution judgment and order addresses all of your assets and divides them equitably.  Thereafter, seek legal counsel to create an estate plan or amend your existing plan.  Without those steps, former loved ones and acquaintances may inherit some or all of your estate.

Todd Miller is a monthly contributor and regularly writes and speaks on various legal topics including bankruptcy, estate planning, probate, and elder law.  He formed the Law Office of Todd Miller, LLC, 1305 Southwest Blvd., Ste. A, Jefferson City, Missouri in 2006.  He has been awarded the Substantial Contributor Attorney Award by the Missouri Bar and ranked as one of the “Top Attorneys in Missouri” by The Legal Network.  Mr. Miller earned his juris doctorate degree from the University of Missouri School of Law in 1999 and graduated with honors from Lincoln University in 1991.  You may find him at www.toddmillerlaw.com (573) 634-2838 or on Facebook, Instagram, and Twitter.